- Twitter stock fell Monday after Elon Musk said the company has breached their $44 billion merger deal.
- Musk's lawyer in a letter told Twitter it has been "thwarting" requests for information about spam and fake accounts.
- Twitter in response said it continues to work to "consummate the transaction" with Musk.
Twitter shares dropped Monday after billionaire Elon Musk said the company has broken their pending $44 billion merger agreement by holding back information about fake accounts and spam on the social media platform.
The stock fell as much as 5.6% to $37.91 then pared the loss, finishing lower by 1.5%.
"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," Mike Ringler, Musk's attorney, wrote to Twitter's chief legal officer, Vijaya Gadde, in an amended filing with the Securities and Exchange Commission.
"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," Ringler wrote.
Musk has previously estimated the share of fake accounts on Twitter is about 25% of users, higher than the company's 5% estimate.
" 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," the company said in response.
In May, Musk suggested cutting the $44 billion offer for Twitter based on the number of bots on the platform. Musk and Twitter last month reached a deal for the world's richest man to pay $54.20 a share for the app.
Ringler told Gadde in the letter that Twitter has "refused" to provide Musk with the information he has repeatedly requested since May 9 to facilitate his evaluation of spam and fake accounts on the company's platform.
"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 Ringler.
Twitter on Friday said a mandatory federal 30-day waiting period for the deal has expired, putting Musk closer to buying the company in a deal that's still subject to approval by Twitter shareholders and other regulations.
Musk raised questions about his desire to complete the merger when last month he put the deal "on hold" while he assessed how Twitter calculates its proportion of fake accounts.
"Mr. Musk has made it clear that he does not believe the company's lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so," wrote Ringler.
Twitter stock has lost 8.5% so far this year.