In a letter sent to the company today, Elon Musk has accused Twitter of “resisting and thwarting” his right to information regarding the fake accounts he had raised earlier. He has also called Twitter apparent refusal to not share the information a “clear material breach” of the terms of the merger agreement.
“Mr. Musk does not agree with the characterizations in Twitter’s June 1 letter. Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company’s platform,” the letter signed by Musk's attorney Mike Ringler, and addressed to Vijaya Gadde, states.
“Twitter’s latest offer to simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk’s data requests. Twitter’s effort to characterize it otherwise is merely an attempt to obfuscate and confuse the issue. Mr. Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so,” the letter, which has accessed via the Securities and Exchange Commision's filings, states.
The letter points out that “Twitter is required to provide data and information” that Musk has requested “in connection with the consummation of the transaction” and that Twitter’s “obligations to provide Mr. Musk with information is not, as the company’s June 1 letter suggests, limited to a ‘very specific purpose: facilitating the closing of the transaction’,”.
“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. To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model—its active user base. In any event, Mr. 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,” the letter states and accuses Twitter of “transparently refusing to comply with its obligations under the merger agreement”.
This, as the letter states, is causing “further suspicion” that the company is withholding data “due to concern for what Mr. Musk’s own analysis of that data will uncover”.
“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. 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,” the letter concludes.
Musk had tweeted last month that his plan to purchase Twitter for $44 billion would not move forward till he got more information about the number of spam/fake accounts on the platform. He had also said that his team would do a random sampling to figure out the number of fake accounts on Twitter. He also shot down CEO Parag Agrawal’s explanation regarding fake accounts and put the transaction on hold. Many are of the opinion that this was an attempt to lower the transaction price.
Twitter has not responded to the letter yet.
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