Why Elon Musk is mulling over terminating Twitter agreement

Elon Musk said Monday in a letter to Twitter that the company is in “clear material breach” of their $44 billion acquisition deal which could lead to the termination of their agreement. 

Musk’s legal team claims that Twitter has failed to provide him with information on the service’s spam bot problem, which had brought the deal on hold.

“Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” the lawyers write, adding that Musk could choose “not to consummate the transaction” because of the alleged breach of contract.

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For weeks, Musk has been complaining about the spam bot problem on Twitter. Musk previously tweeted that the deal was “on hold” due to his concerns, adding that the deal “cannot move forward” until Twitter proves the accuracy of its spam counts.

According to Wedbush Securities analyst Daniel Ives, the letter indicates Musk is “looking to walk away from [the] deal.” Twitter has not responded to the letter so far.

Last month, Twitter CEO Parag Agrawal said the company had provided Musk with an explanation. “We shared an overview of the estimation process with Elon a week ago,” Agrawal wrote in mid-May, “and look forward to continuing the conversation with him, and all of you.”

Twitter estimates that less than 5 percent of its daily users are spam accounts.

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Musk and Agrawal had got into a public spat over the bot issue. Agrawal had attempted to clarify the company’s stance on bots, and how the social media platform tackles the issue.

However, Musk responded with a poop emoticon, and on a separate occasion said, “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%.”