Twitter kept its commitment to sue Elon Musk for attempting to walk away from a deal to buy the social media company.
Twitter’s lawyers filed a lawsuit against Musk on Tuesday, alleging that the billionaire has “refused to honor his responsibilities.” Twitter was sued in Delaware Chancery Court, where the company is incorporated.
Musk’s attempt to “terminate” the merger agreement he signed in April, declaring he would purchase Twitter and take it private for $54.20 per share, putting a value on the deal of $44 billion, is at the heart of the case against him. Over the weekend, Twitter’s legal team branded Musk’s move “illegal and unlawful.”
Tesla CEO Elon Musk wrote a letter to Twitter saying that the company refused to hand over “useable” user data, misled him and the SEC about the number of “bots” or spam accounts on the platform, and made decisions to conduct layoffs and let go of key executives without his approval, which he characterized as a breach of trust.
According to Musk’s attorneys, all of this amounts to a “breach” of the contract. To put it another way, the $1 billion break-up fee stipulated in the agreement is not a need for him to walk away from the contract.
In its lawsuit, Twitter argued that all of those arguments were “pretexts” that were “without any merit.” Musk signed a “binding” merger agreement in April, which means he is legally required to finish the acquisition as agreed upon, but he is only trying to back out now “because it no longer serves his personal interests,” according to the report.
A few hours after the lawsuit was filed, Musk tweeted, “Oh the irony lol,” in response.
Despite a 44 percent drop in the price of Tesla stock this year, lawyers for Twitter cited Musk’s personal fortune, which is heavily invested in the company’s stock.
The value of his Tesla stock has dropped by more than $100 billion since the end of last year, according to the reports. Since the stock market has fallen, Musk has stated that he “wants out” of his deal to purchase Twitter and wants to “transfer” Twitter’s shareholders the “expense” of the decline.
Lawyers for Twitter said that Musk “apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away” after he put Twitter in play and proposed and signed a “seller-friendly” merger agreement. Musk’s rejection comes “after a long series of major contractual breaches by Musk,” according to the Wall Street Journal.
Lawyers cited a number of Musk’s tweets that discussed the acquisition and certain Twitter officials, claiming that each represented a breach of secrecy and disparagement restrictions in the deal. “Reasonable” information on the deal’s financing was allegedly not provided, and he was also alleged to have treated additional inquiries in the same manner.
In addition to Musk’s finance for the acquisition, numerous other areas were hypothesized as probable weak places in the agreement. The platform referred to the deal’s debt and equity financing as “airtight” and referred to Musk’s personal $33.5 billion commitment.
As a result, Tesla’s stock price has fallen by 20% this year, and the firm blamed Musk for the dip, claiming his “antics” and “disdain he has exhibited” for the company created additional risks for the company and strained its stock.
Tweet insists that Musk must complete the acquisition of the company for $44 billion despite all of this. After the agreement was breached, it requested that he be enjoined from violating it again. Due to the possible damage to Twitter’s business, if the case goes on for an extended period of time, Twitter is requesting an expedited hearing in September.
Lawyers for Tesla CEO Elon Musk could not be immediately contacted.
- Twitter Deal “Terminated” by Elon Musk Due to Material Breach
- Breaking His Twitter Silence, Elon Musk Posted a Picture of Himself, Four of His Sons, and Pope Francis!