Elon Musk threatened to end his purchase of Twitter (NYSE: TWTR) on Monday, after stating that the social media company violated the merger agreement. The accusation details that Twitter has refused to provide the data Musk requested regarding spam and fake accounts. Twitter’s stock fell 5% amid the news.
“Based on Twitter’s behavior to date, and the company’s latest correspondence, in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” Musk’s counsel said in an SEC filing released Monday morning. “This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”
Musk is asking that Twitter disclose its testing techniques as a means of supporting claims that fake accounts amount to less than 5% of the platform’s users. Furthermore, Musk is asking to complete his own independent assessment based on Twitter data.
A Twitter spokesperson says that “Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
If Musk decides to call off the USD44 Billion agreement to purchase the social media platform, he will face a USD1 Billion fee.