Elon Musk accuses Twitter of being in 'material breach' of merger deal in formal complaint

On Monday, tech billionaire Elon Musk sent a new legal warning to Twitter, accusing the company of fraudulently concealing data on how many of their users are authentic and how many are "spam bots" — and threatening to pull the plug on the acquisition deal.

"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," said the letter. "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."

"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," continued the letter. "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."

Musk's repeated threats to back away from the $44 billion merger over "spam bots" comes as the stock price of Tesla has tumbled, reducing the collateral Musk has available to secure the agreement — raising speculation that he is simply looking for a way out of a deal he can't afford.

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However, it is not clear whether the complaints Musk raised will be a sufficient breach for him to successfully avoid the $1 billion "reverse termination fee" he would be responsible for if he backs out.

As The Washington Postnoted last month, the drop in Tesla stock price threatens Musk's finances, as he has frequently used the value of his Tesla holdings to secure personal loans.