Lawyers for Musk, the world's richest man, made their displeasure known in a letter to the social networking site.
The lawyers wrote that the social media service was trying to prevent Mr. Musk from taking the company private. They said that the company was not releasing the number of fake accounts on its platform. The lawyers said that Mr. Musk had the right to walk away from the agreement.
The letter was delivered to the company and was filed with the SEC. After striking a deal to buy the micro-messaging service, Mr. Musk has suggested that he might want to scrap the deal. His legal argument for pulling out was crystalized in Monday's letter.
It made it difficult to know whether Mr. Musk would complete the deal. If one or the other side took the matter to court, there was a chance of a contentious legal battle. If Mr. Musk pursues that route, the terms of the deal give him the power to force a completion of the acquisition if his debt financing is intact.
The letter made some people roll their eyes. The latest move by Mr. Musk, who leads the electric carmaker and the rocket company, is not entirely unexpected.
According to a senior investment and markets analyst at Hargreaves Lansdown, this is a move that has been in the works for a long time. The takeover was always going to be difficult.
The sale to Mr. Musk remained on track, according to the social media company. The company will continue to share information with Mr. Musk in order to complete the transaction.
A person with knowledge of the situation said that Mr. Musk had been given information by the social media site for about a month.
According to a memo obtained by The New York Times, Sean Edgett sent an email to employees on Monday morning repeating the company's commitment to close the deal.
The price that Mr. Musk agreed to pay for the company was far below the stock's closing price.
Mr. Musk did not reply immediately.
Mr. Musk appears to have gotten some traction on the issue with other people. The Texas attorney general said in a statement that he was opening an investigation into the company for possibly misleading Texans.
The social media company declined to comment on the matter.
Mr. Musk said he wanted to take the company private, allow more free speech, and improve the service when he agreed to buy it. Fears of inflation, the war in Ukraine and supply chain challenges have caused the stock market to plunge.
Mr. Musk is the main source of wealth for the company. Credit markets have been rattled by the turmoil, which could make it harder for banks to raise debt to finance takeovers. According to analysts, the factors have given Mr. Musk buyer's remorse about spending so much money on the company.
Mr. Musk has been threatening to put the deal on hold over the number of fake accounts. The deal cannot move forward until the company proves that these accounts make up less than 5 percent of its users. He said at the Miami conference that he may be trying to lay the groundwork for a new deal.
In doing so, Mr. Musk appeared to be building a case to argue that a material adverse change to its business could allow him to walk away from the deal. Legal experts have questioned the merits of that argument since it's been known for a long time that fake accounts make up a small portion of users.
The letter on Monday was a new strategy. Rather than simply saying that the billionaire did not believe the numbers, his lawyers said in the letter that the company was breaching its obligations by not giving Mr. Musk the information he needed to make a decision.
According to the lawyers, Mr. Musk made it clear that he does not believe the company's testing methodologies are adequate so he needs to conduct his own analysis.
The debt financing that banks have committed to fund the deal is dependent on the cooperation of the social networking site. $13 billion in debt has been committed by Morgan Stanley and other banks. The same legal contracts are used to govern those commitments.
He is attempting to get out of the merger agreement. If the information requests were necessary or reasonable for Musk to be able to get his financing, then that would be a betrayal that would allow Musk to walk away.
She said that the company could argue that it doesn't have the information that Mr. Musk is asking for.
The deal is expected to close by the end of October. Either side can leave if it doesn't close by then. If the transaction is delayed, Mr. Musk will have another six months to complete it. Under certain conditions, the deal includes a $1 billion break-up fee.
The agreement appears to be going in the right direction. The Federal Trade Commission cleared the way for the sale of the company.
Last month, Mr. Musk disclosed in a filing that he had raised his personal cash commitment to the deal and canceled a planned loan against shares ofTesla. He said he was in talks with other shareholders about taking their existing shares into the company.
The completion of the deal is something that is very important to the company. Difficulties delivering consistent financial results and increasing the number of users have been encountered by the company.
Last month, the company's chief executive cut the company's discretionary spending and froze new hires. He has made changes to the company's top ranks since he took over. Employees have been told to try to stay on course.
He said at the company meeting that they had been through a period of uncertainty. We are going back to work.
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