Musk says Twitter is 'actively resisting and thwarting' his right to information on spam, fake account data

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Tesla CEO Elon Musk accused Twitter of "actively resisting and thwarting" his information rights by failing to provide calculations supporting the social media platform's internal estimate on spam and fake accounts.

"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," attorneys for Musk wrote in a letter to Twitter on Monday. 

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In April, Twitter accepted Musk's $44 billion offer to acquire and take it private at $54.20 per share. However, Musk has since said the deal is temporarily on hold pending details supporting Twitter's calculations that spam and fake accounts make up less than 5% of users. 

In the first quarter of 2022, Twitter's monetizable daily active user (mDAU) base grew 15.9% year over year to 229 million, including 39.6 million daily active users in the U.S. and 189.4 million international daily active users.

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Musk, who has vowed to crack down on Twitter's spam bots, said last month that his team would conduct its own random sampling to calculate the number of spam and fake accounts. 

In response, Twitter CEO Parag Agrawal said an external review to determine the percentage would be difficult given the "critical need to use both public and private information."

The billionaire believes at least 20% of Twitter users are spam or fake accounts and has expressed his willingness to renegotiate the deal for a lower price proportionate to the total percentage.

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Monday's letter argues that Twitter is obligated to provide Musk with information and data for "any reasonable business purpose related to the consummation of the transaction." It also notes that the social media giant must provide "reasonable cooperation" in connection with Musk's efforts to secure debt financing for the transaction, including by providing "reasonably requested" information.

"At this point, Mr. Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, 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 letter states. "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 letter added that Musk would ensure anyone reviewing that data would be bound by a non-disclosure agreement and that he will not retain or use any "competitively sensitive information" if the deal does not close.

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A Twitter spokesperson told FOX Business the company has and will continue to cooperatively share information with Musk to consummate the transaction in accordance with the terms of the merger agreement. 

"We believe this agreement is in the best interest of all shareholders," the spokesperson added. "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."

The deal, which recently cleared antitrust review in the U.S., is expected to close in 2022, subject to shareholder and remaining applicable regulatory approvals. 

Musk initially planned to finance the Twitter deal with $21 billion in equity and $25.5 billion in loans. Approximately $12.5 billion in margin loan financing was pledged against his Tesla shares. The margin loan financing was later reduced from $12.5 billion to $6.25 billion, while his equity financing increased to $27.25 billion.

Musk has since pledged an additional $6.25 billion in equity, bringing the total portion to $33.5 billion and eliminating the margin loan financing. Musk is also in talks with Twitter co-founder and former CEO Jack Dorsey about additional financing.

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