Greg Roumeliotis & Krystal Hus

(Reuters) – A unilateral declaration that acquisitions of Twitter Inc (NYSE) is currently “on hold.” There has been a lot of criticism about the handling of spam accounts at social media companies. Parag Agrawal (chief executive of Twitter) was the target of a “poop-emoji”.

These were just a few of Elon Musk’s tweets over the past four days. On Monday, the Tesla Inc chief executive suggested that the $44 billion deal could possibly be renegotiated for a more affordable price.

According to sources familiar with the matter, Twitter claims Musk’s remarks violated the non-disparagement terms in his deal to purchase Twitter.

The source said that Musk has been a “troller” in the San Francisco deal and the company is not taking legal action. However, it plans to take legal action if Musk does not complete all the necessary tasks.

Sources involved in the deal said that Twitter was trying “block out noise”.

Sources say that Musk’s representatives are continuing to cooperate with Twitter. According to sources, they are still preparing information to be submitted to regulators. Twitter intends to file its proxy statements, detailing for shareholders, if necessary, this week.

According to sources, there are also some Twitter advisers and executives who are worried that Musk might be setting the stage for renegotiating and they are now preparing to defend their deal before the courts. The sources pointed out Musk’s negative comments regarding the agreement.

Musk stated that the “more questions I ask” about spam accounts, the greater my concern grows. He spoke at Monday’s Miami conference.

Because they were discussing confidential deals planning, the sources asked not to be named. Requests for comment were not answered by representatives from Twitter or Musk.

Some Twitter leaders are not ignoring Musk’s remarks. Agrawal posted on Twitter Monday in defense of the company’s method for accounting spam accounts. Bret Taylor, Twitter chairman, tweeted Friday “We remain committed to our deal”.

Twitter shares traded at $37.39 on Monday, which is 5% below where they traded on April 4, when Musk disclosed that he has a stake and 31% less than the $54.20 share price. It is likely investors believe Musk will either walk away from the company or negotiate a deal at a less expensive price.

Sources said that Twitter will continue to supply information to Musk on spam accounts. According to his contract with Twitter, Musk has the right to access this information in order to plan his purchase of Twitter.

Musk has challenged the authenticity of Twitter’s public disclosures. The company stated in a statement that the accounts made up “well less than 5%”of its user base. Twitter cautioned that these figures are an estimate.

According to independent researchers, bots account for between 9% and 15% of all the Twitter accounts. Musk claimed Monday that they are at least 20% of Twitter’s users.

Twitter is concerned that Musk may break his confidentiality agreement and reveal confidential information to its users and platform, according to one source. Musk has stated that Twitter should make its platform’s operations more transparent.

WAIVED DUE SILIGENCE

Musk, who is the richest man in the world, agreed to purchase Twitter on April 25. He did this to try to convince the San Francisco-based firm to take his best and last offer.

Technology stocks plunged since then amid concerns about inflation and a slowdown in the economy.

Musk has a contractual obligation to Twitter for a $1B break-up fee in the event he doesn’t complete the deal. The contract includes a “specific performance clause” that Musk can invoke to force him to sign the agreement.

Acquisitions of acquirers that are not successful in a performance case will almost always be completed. They can negotiate a financial settlement with their targets.

Wedbush Securities called Musk’s citing of the spam accounts as grounds to put the deal on hold a “dog-ate-the-homework excuse” given that the company was making the same disclosure on the matter since it went public in 2013.

According to Wedbush analyst, “The grim reality is that Twitter will not be able to find any other strategic/financial bidders for this deal.”