Musk ‘Reserves All Rights’ to Terminate Twitter Deal, Say His Lawyers

Twitter’s refusal to share data with Elon Musk on the number of fake and spam accounts on the platform puts the company in noncompliance “with its obligations under the merger agreement,” lawyers for the Tesla CEO wrote Twitter Chief Legal Officer Vijaya Gadde Monday. “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,” said the lawyers. “To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model -- its active user base.” Due to the “clear material breach” of Twitter’s obligations under the merger agreement, “Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.” they said. Twitter didn’t comment. Twitter shares closed 1.5% lower Monday at $39.56 -- roughly 27% below Musk's $54.20 offer price. In “certain specified circumstances” in which Musk's takeover is terminated, Musk has agreed to pay Twitter a $1 billion “reverse termination fee,” the payment of which he has personally “guaranteed,” says their merger agreement (see 2205170006). Musk has said the deal can't move forward until Twitter shows proof that fake or spam accounts comprise less than 5% of its memberships.