While Elon Musk is seeking to press Twitter for information on its user base — arguing the company is not forthright on the proportion of fake accounts — Twitter is firing back saying the deal remains on.
"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," a Twitter statement to Yahoo Finance read Monday. "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."
Musk is threatening to walk away from his $44 billion bid to buy Twitter in a letter to Twitter dated Monday and included in a filing from Twitter with the U.S. Securities and Exchange Commission.
The letter says Musk has repeatedly asked for the information since May 9, about a month after his offer to buy the company, so he could evaluate how many of the company's 229 million accounts are fake.
The lawyers say in the letter that Twitter has offered only to provide details about the company's methods for determining the number of accounts. But they contend that's "tantamount to refusing Mr. Musk's data requests." Musk wants underlying data so he can do his own verification of what he says are Twitter's lax methodologies.
The lawyers say that based on Twitter's latest correspondence, Musk believes the company is resisting and thwarting his information rights under the April 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 says.
The Twitter sale agreement allows Musk to get out of the deal if there is a "material adverse effect" caused by the company. It defines that as a change that negatively affects Twitter's business or financial conditions.
Last month Musk said that he was unilaterally placed the deal on hold, which experts said he can't do. If he walks away, he could be on the hook for a $1 billion breakup fee.
Musk's latest maneuver shows how he is "looking for a way out of the deal or something that will get leverage for a renegotiation of the price," said Brian Quinn, a law professor at Boston College. But Quinn said it is unlikely to hold up in court since he already waived his ability to ask for more due diligence.
"I doubt he would be allowed to walk away," Quinn said. "At some point, the board of Twitter will tire of this and file a suit" asking a judge to force Musk to stick to the deal.
Twitter CEO Parag Agrawal has said the company has consistently estimated that fewer than 5% of Twitter accounts are fake. Twitter has disclosed its bot estimates to the U.S. Securities and Exchange Commission for years, while also cautioning its estimate might be too low.
"If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company's reluctance to allow Mr. Musk to independently evaluate those estimates," the Musk letter says, adding he agrees not to disclose or keep the data.
Information from The Associated Press was used in this report.
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