October 3, 2022

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Elon Musk threatens to scrap $44bn Twitter deal over ‘material breach’

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Elon Musk has accused Twitter of committing a “material breach” of his $44bn (£35bn) agreement to buy the company and has threatened to terminate the deal, in the clearest indication yet that the world’s richest man is preparing to walk away from the takeover.

Musk’s lawyers have written to Twitter accusing it of refusing to provide sufficient information about the number of false users on the service, as part of a simmering dispute over the number of spam and fake accounts that populate the platform.

In a letter to Twitter’s chief legal officer, Vijaya Gadde, lawyers representing the Tesla CEO said he believed the company was “actively resisting and thwarting” his rights to access data and information from the company under the agreement. The letter said Twitter had failed to provide the information requested by Musk since 9 May, adding that a formal response from the social media platform on 1 June was insufficient.

“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,” said the letter from US law firm Skadden, Arps, Slate, Meagher & Flom. Musk’s legal team is arguing that failure to provide information about false accounts breaches a covenant in the agreement, a promise to act in a certain way during the sale process, which would allow him to walk away from the deal.

It said Twitter’s methods for testing fake accounts were “lax” and that Musk needed data from the company to conduct his own analysis, as well as to help him secure debt financing for the deal. It added that the company’s refusal to cooperate indicated a concern for what Musk’s analysis might uncover.

The letter concluded with a warning that Musk reserved all his rights under the agreement, including his right to walk away from the deal and “terminate” it.

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2022-06-07 01:57:04

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