Elon Musk accused Twitter of “actively resisting” his right to information about bogus accounts on the social media platform and violating the terms of their $44 billion sale agreement, according to a letter sent Monday.
In the letter to the company drafted by his legal team, the world’s richest man reiterated concerns that caused him to pause his bid for Twitter weeks ago, claiming Twitter was breaching obligations to turn over any data he deems relevant to the deal.
The Tesla CEO now believes Twitter is “transparently refusing to comply” with the terms they agreed to, “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.”
The move adds to speculation that Musk is trying to wriggle free of the agreement, which comes with a $1 billion breakup fee, though his past tweets suggest he may try to get around that cost.
Since he first voiced interest in Twitter in April, Tesla’s stock – the source of Musk’s personal fortune – has been pummeled amid a broader pullback for tech stocks.
Last week, he said Tesla would cut salaried staff by 10% and put a freeze on hiring, telling executives in an email that he had a “super bad feeling” about where the economy was headed.
“We believe this is much more than a threat,” Dan Ives, managing director at Wedbush Securities, told The Post. “He is trying to bail out of the deal.”
Ives said the faulty account issue was always going to be the “material breach” Musk would use to secure his exit. “It will help remove a major overhang on Tesla.”
Securities law experts have said that Musk backing out at this stage could result in a protracted and messy legal battle, leaving the tech mogul incurring costs well over the penalty for walking away.
Spam bots, accounts that peddle cryptocurrency scams and otherwise seek to exploit vulnerable users, have long been a pet peeve of Musk– one of the platform’s most popular users, with over 96 million followers – who regularly encounters impersonators in his activity on the site.
Twitter’s own estimates put the number of spam accounts at 5% or less, but Musk has been calling for data the social media company says it cannot provide to verify the true figure.
“As Twitter’s prospective owner, Mr. Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing,” says the letter, signed by Musk’s lawyer Mike Ringler, a mergers and acquisitions specialist. “To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model – its active user base.”
Musk “is not required to explain his rationale for requesting the data, nor submit to the new conditions the company has attempted to impose on his contractual right to the requested data,” lawyers noted.
Twitter did not immediately respond to a request for comment from the Post.
Twitter’s shares slumped 2.9% at midday. Tesla’s shares edged up 1.5%.
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