Highlight
- Twitter sues Musk to try to force him to complete $44 billion acquisition of social media company
- Twitter accuses him of strange, bad faith actions that have caused irreparable damage to the platform
- Back in April, Musk pledged to pay $54.20 per share for Twitter
Twitter Elon Musk NewsTwitter sued Tesla CEO Elon Musk on Tuesday (July 12), accusing him of “strange” and “bad faith” efforts to force him to complete his $44 billion acquisition of the social media company. ” actions that caused irreparable damage to the platform and “wreaked havoc” on its share price.
Back in April, Musk promised to pay $54.20 per share for Twitter, which agreed to those terms after reversing initial opposition to the deal. But both sides are up for a legal battle as the billionaire said on Friday he was withdrawing from his agreement to buy the company.
Twitter’s lawsuit begins with the scathing words: “Musk refused to honor his obligations to Twitter and its shareholders because the deal he signed no longer serves his personal interests.”
“After making a public spectacle to run Twitter, and being proposed and then signing a vendor-friendly merger agreement, Musk clearly believes he is—subject to Delaware contract law.” Unlike every other party—free to change its mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the suit states.
Twitter filed its lawsuit in the Delaware Court of Chancery, which often handles business disputes between several corporations, including Twitter, that are involved there.
Musk and Twitter deal,
As part of the April deal, Musk and Twitter had agreed to pay each other a $1 billion breakup fee if either of them was responsible for the deal. The company could have pushed Musk to pay a hefty fee, but he’s going even further, trying to force him to complete the full $44 billion purchase approved by the company’s board.
“Oh ironic lol,” Musk tweeted after suing Twitter without explanation.
Law professor Brian Quinn said the arguments and evidence provided by Twitter are compelling to get a receptive ear in a Delaware court, which doesn’t look kindly on sophisticated buyers with highly paid legal counsel. Boston College.
“They make a very strong argument that it’s just buyer’s remorse,” Quinn said. “You have to eat your mistakes in Delaware Chancery Court. It’s going to work out very favorably for Twitter.”
Musk’s allegations,
Musk on Friday alleged that Twitter failed to provide sufficient information about the number of fake accounts on its service. Twitter said last month that it was providing Musk a “fire hose” of raw data on hundreds of millions of tweets daily.
The company has said in regulatory filings over the years that it believes about 5% of accounts on the platform are fake. Musk is also alleging that Twitter broke the acquisition agreement when it fired two top managers and laid off a third of its talent-acquisition team.
Twitter’s lawsuit repeatedly emphasizes Musk’s contemplation of starting a Twitter competitor—an alternative he has sometimes publicly and sometimes privately aired to Twitter executives and board members. While the company has said it cooperated with providing requested data on fake “spam bot” accounts, the lawsuit suggests that Twitter was concerned that disclosing too much “highly sensitive information” could put the company at a competitive disadvantage. If shared.
The biggest surprise to Quinn was how much evidence Twitter had—for example, communications with Musk about whether to retain or lay off employees, as well as the billionaire’s own public tweet-backs. To reject their arguments for.
“They’re marshalling a lot of Musk’s tweets to flaunt their own petard,” he said.
In a joint press release announcing the acquisition deal, Musk pledged to “unlock” the social media company’s potential by easing restrictions on speech and rooting out fake accounts. Among his most attention-grabbing promises was to let former President Donald Trump return to the stage. Musk argued that Twitter’s ban on Trump was “morally bad” and “stupid in the extreme” after the January 6, 2021 uprising in the US Capitol.
But his confidence did not last long. Tesla’s stock—Musk’s primary source of funding—plunged in May amid a broader stock market sell-off, and Musk soon seemed less enthusiastic about owning Twitter.
“For Musk, the best-case scenario is that he pays a $1 billion breakup fee, but that seems very unlikely,” said Daniel Ives, analyst at Wedbush Securities. “Ironically, Twitter as a fiduciary clearly wants to enforce a deal that Musk doesn’t want to do. It’s like buying a house you don’t want.”
Twitter’s suit called Musk’s strategy “a model of hypocrisy,” noting that he insisted on plans to take Twitter private to get rid of spam accounts. Once the market plunged, Twitter said, “Musk changed his statement, suddenly seeking ‘verification’ that spam was not a serious problem on Twitter’s platform, and a flaming call to ‘labor’.” Claiming necessity, he had categorically given up.”
Similarly, the company alleged that Musk acted in bad faith, accusing Twitter of soliciting company information to accuse regulators and investors of providing “misrepresentation” about his business.
Musk “has been acting against this deal because the market has begun to turn, and has repeatedly violated the merger agreement in the process,” the suit alleged. “They have asked to put the deal on ‘hold’ pending the satisfaction of notional terms, in the process have breached the obligations of their financing efforts, reasonably treat requests for consent and provide information on financing status.” has violated its obligations to do so, has violated its nondiscrimination obligation, misused confidential information, and otherwise failed to employ the efforts necessary to complete the acquisition.”
(with inputs from agencies)
Read also: Explainer: What happens next in the Musk-Twitter saga?