Twitter has asked a Delaware court to compel Elon Musk to honor his $44 billion agreement to buy the company, setting off a high-stakes legal battle between the billionaire entrepreneur and the social media platform.
The Silicon Valley company filed the suit in Delaware Chancery Court on Tuesday, just days after Musk announced last week that he planned to terminate the deal, claiming Twitter breached the merger agreement by not sharing enough information about fake accounts.
In the strongly worded complaint, Twitter’s lawyers said Musk’s claims were “suggestion and have no basis in fact.” They argued that Tesla’s CEO was trying to back out of the deal rather than “bear the cost” of the tech stock’s decline.
“After making a public spectacle of bringing Twitter into play, and after proposing and then signing a seller-friendly merger agreement, Musk apparently believes that he — unlike any other party subject to Delaware contract law — is free to change its mind, trash a company, disrupt its operations, destroy shareholder value and walk away,” the complaint said.
The complaint also accuses Musk of “a long list of material contractual violations. . . which cast a pall over Twitter and its business,” including putting the deal on hold “pending satisfaction of imaginary conditions,” breach of financial covenants and misappropriation of confidential information.
The lawsuit contained images of numerous tweets in which Musk appeared to goad Twitter and its management, which his lawyers argued violated a contractual obligation not to disparage the company.
The move sets off a messy legal battle between Twitter and one of its most prolific and powerful users. The company’s lawyers asked the court to expedite the case to September.
The lawsuit reveals how the deal between Twitter and Musk unfolded, starting with the 9.1 percent stake he “secretly” built in March.
It said Musk told Twitter CEO Parag Agrawal and chairman Brett Taylor that he had three options in mind: join the company’s board, take over the business or create a competitor.
Musk was offered and accepted a seat on the board, but days later changed his mind and made an unsolicited offer for Twitter, saying he would have to “reconsider his position as a shareholder” if his offer was not accepted.
In announcing his plans for Twitter, Musk promised to boost the flailing business, remove fake accounts from the platform and usher in a spirit of “freedom of speech.”
But on Friday, Musk announced his intention to back out of the deal.
It is recommended
His team disputed Twitter’s estimate of the number of fake accounts at 5 percent of users and accused it of making “materially misleading statements” in its public disclosures.
In its lawsuit, Twitter rejected the claim of fake accounts and called Musk’s reason for backing out of the deal a “pattern of hypocrisy.” Musk also texted Taylor in April to say that “purging the fake users” could only be done if Twitter were a private company because “it would make the numbers look terrible,” according to the complaint.
Some analysts have suggested that Musk may be trying to negotiate the deal at a lower price, given the rout in tech stocks, and that the parties may reach a settlement to avoid costly and protracted litigation. Musk did not immediately return a request for comment.
Twitter’s lawsuit also cites speculation that Musk’s offer to buy the company may have been a prank gone too far: “For Musk, it appears, Twitter, the interests of its shareholders, the deal Musk agreed to, and the legal enforcement process it’s all an elaborate joke.
Add Comment