Tesla and SpaceX CEO Elon Musk is threatening to walk away from his $US44 billion ($A61 billion) acquisition of Twitter unless the company gives him information about fake accounts and spam bots.
Lawyers for the billionaire issued a letter to the social media platform on Monday, who then duly disclosed it with the US Securities and Exchange Commission.
The letter says Musk has repeatedly sought information since May 9 (approximately a month after his initial offer to buy the company) over how many of Twitter’s 229 million accounts were fake.
“We 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 in a statement.
“We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
Musk agreed to purchase Twitter for $US54.20 a share, but public backlash to the purchase has seen share prices decrease by 23 per cent in the last month, resulting in shareholders filing a lawsuit against Musk for deflating stock.
Twitter CEO Parag Agrawal has maintained the platform has consistently estimated that fewer than five per cent of accounts are fake, a number that Musk wants to drastically reduce to zero immediately.
The 50-year-old’s lawyers said in the letter that Twitter would only provide information about testing methods for verification, which is “tantamount to refusing Mr. Musk’s data requests” and qualifies as a “material breach” of the merger agreement.
Musk wants underlying data so he can independently implement a verification system to rid Twitter of all bots and fake accounts, providing the platform with an opportunity to avoid the “plague of fake news and misinformation” which has plagued the company’s reputation in the past.
Boston College law professor Brian Quinn said that the tech entrepreneur is “looking for a way out” of the deal or leveraging for a renegotiation of the price, which is unlikely.
“I doubt he will be allowed to walk away,” he said.
“At some point, the board of Twitter will tire of this and file a suit.”
We’ll keep you posted.