Billionaire entrepreneur Elon Musk has warned Twitter’s board of directors that he may back out of a deal to buy the social media platform for $44 billion because the company has failed to provide information on spam and fake accounts.
“This is a clear material breach of Twitter’s obligations under the merger agreement, and Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” lawyers for the Tesla and SpaceX CEO said on Monday in a letter to Twitter, reports RT.
Twitter said it has shared information with Musk in accordance with terms of the takeover agreement. “We intend to close the transaction and enforce the agreement at the agreed price and terms,” the company said in a statement.
Musk could be hit with a $1 billion breakup fee, as well as investor lawsuits, if he aborts the deal. Twitter shareholders have already sued him for driving down the company’s stock price by sowing doubt about the transaction. The stock fell 1.5 percent on Monday to $39.56, currently 27 percent below the takeover price of $54.20 that Musk agreed to pay for each share that he doesn’t already own.
“At this point, Mr. Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data due to concern for what Musk’s own analysis of that data will uncover,” his lawyers said in Monday’s letter. “If Twitter is confident in its publicized spam estimates, Musk does not understand the company’s reluctance to allow Musk to independently evaluate those estimates.”