Twitter Inc. sued Elon Musk on Tuesday for breaching a $44 billion U.S. deal to buy the social media platform and asked a Delaware court to order the world’s richest man to complete the merger for the agreed-upon $54.20 per Twitter share, according to court filing.
“Musk apparently believes that he — unlike any other party subject to Delaware contract law — is free to change his mind, break up the company, disrupt its operations, destroy shareholder value, and walk away.” says in the lawsuit.
On Friday, Musk said he was ending the deal because Twitter breached the agreement by failing to respond to requests for information about fake or spam accounts on the platforms, which is fundamental to its business performance.
Musk, who is chief executive of electric vehicle maker Tesla Inc., did not immediately respond to a request for comment.
The lawsuit accuses Musk of a “long list” of violations of the merger agreement that “cast a stain on Twitter and its business.”
Twitter also accused Musk of “secretly” stockpiling shares in the company between January and March without properly disclosing his significant purchases to regulators, and said he “instead continued to stockpile Twitter stock while the market was no longer wise”.
WATCH | Musk’s plan sparks free speech debate:
Elon Musk’s deal with Twitter sparks debate over free speech
Calling himself a “free speech absolutist,” Elon Musk’s deal to take over Twitter has reignited the debate surrounding free speech on social media platforms. Some fear that under Musk’s ownership, Twitter could be used as a platform to spread disinformation and monitor critics.
Shares of the social media platform closed at $34.06 on Tuesday, up 4.3%, but sharply below the $50-plus levels where it was trading when the deal was approved by Twitter’s board in late April. The stock added another percent after the bell.
Musk said he was ending the merger because of the lack of information about spam accounts and inaccurate statements, which he said constituted a “significant adverse event.” He also said the departure of an executive amounted to a failure to conduct business as usual — although Twitter said it removed that language from the merger agreement during negotiations.
Twitter also said it did not share more information with Musk about spam accounts because it feared he would build a competing platform after abandoning the acquisition.
Twitter called the reasons cited by Musk a “baseless pretext” and said his decision to step down had more to do with the stock market slump, especially for tech stocks.
Shares of Tesla, the main source of Musk’s wealth, have lost about 30% of their value since the deal was announced and closed Tuesday at $699.21.
In a separate statement, Twitter asked the court to schedule a four-day trial in mid-September.
LISTEN | Musk’s Twitter game:
Front Burner31:05 Tactics or trolling: Elon Musk’s Twitter game
Elon Musk, the richest man in the world, is making a play to take over Twitter. It’s a platform he dominates already with 82 million followers. The bold but unconventional tactics he employs are a trademark for Musk; part tech billionaire, part internet troll. Today on Front Burner, we talk with the Washington Post’s Will Oremus about Musk’s latest venture, some of his past controversies, and whether it’s even possible to hold the world’s richest man accountable.
Twitter may have an advantage
Legal experts said that from the information that is public, it appears that Twitter has the upper hand.
“In its complaint, Twitter takes a strong position that Musk had a case of buyer’s remorse — and that, not bots, was the reason for his decision to back out of the deal,” said Brian Quinn, an associate professor at Boston College Law School. “The facts that Twitter presents here make an extremely strong case for Twitter to make this deal.”
Musk is among the most followed accounts on Twitter, and the lawsuit included images of several of his tweets, including emoticons, which the company said violated the merger’s “non-disparagement” clause.
Musk tweeted the emoji on May 16 in response to two tweets from Twitter CEO Parag Agrawal explaining the company’s efforts to combat spam accounts.
It also included an image of a text message Musk sent to Agrawal after Twitter asked on June 28 for assurances about Musk’s financing of the deal.
“Your lawyers are using these conversations to create trouble,” Musk wrote to Agrawal. “This has got to stop.”
Twitter noted that after Musk said he was ending the deal, he sent tweets on Monday that Twitter said suggested his spam requests were part of a plan to force spam data into the public domain.
“To Musk, it appears that Twitter, the interests of its shareholders, the transaction Musk agreed to, and the legal process to enforce it all represent an elaborate joke,” the lawsuit says.
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