One of the biggest news announcements this year has been the potential acquisition of social media platform Twitter by Elon Musk.
This week Musk has accused Twitter of ‘resisting and thwarting’ his right to information on fake accounts.
In a letter to Twitter, a lawyer for Musk called it a “clear material breach” of the terms of their merger agreement.
Musk waived due diligence when he agreed to buy Twitter at $54.20 per share in April.
“Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” the letter, signed by Skadden Arps attorney Mike Ringler, says.
Twitter shares were down 5% on Monday morning.
He wrote in a letter to Twitter Chairman Bret Taylor on April 24, “As we discussed, $54.20 has been and will remain my best and final offer, period. This is binary – my offer will either be accepted or I will exit my position.”
Twitter announced the company had accepted his offer the next day.
Musk later vocally criticized Twitter during media interviews and on Twitter.
He announced in May that his $44 billion purchase of the company would not move forward until he had more information about the number of fake accounts on the service.
On May 17, the Tesla CEO suggested Twitter had included bad information in its financial filings. He wrote: “My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”
He said his team would do a random sampling to calculate the number of fake accounts, but Twitter’s CEO later explained that nonpublic information would be necessary to get an accurate count. Twitter executives told staff there’s “no such thing” as putting the deal on hold as Musk claimed, according to a report in Bloomberg.
A proposed class-action lawsuit in California was filed in May and contends that Musk broke California laws by making investors doubt whether he would complete the deal event after signing a contract to buy Twitter.
Shareholders involved in the complaint want Musk to complete the deal as promised, buying Twitter at $54.20 per share.
In Monday’s letter, Musk’s lawyer wrote that the merger agreement requires Twitter to provide the data Musk requested and disputed the company’s alleged claim that it is only required to provide information for the limited purpose of helping to close the transaction.
“To the contrary, Mr. Musk is entitled to seek, and Twitter is obligated to provide, information and data for, inter alia, ‘any reasonable business purpose related to the consummation of the transaction,’” the letter says.
“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 Mr. Musk’s own analysis of that data will uncover,” it continues.
“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,” the company said later Monday in a statement. “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.”
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.