Twitter Inc. on Tuesday sued Elon Musk for breaching a $44 billion deal to buy the social media platform and asked a Delaware court to pay the world’s richest man $54.20 per Twitter share to complete the merger. order to do.
“Musk expressly 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,” stated in the complaint.
The lawsuit sets in motion what promises to be one of the largest legal demonstrations in Wall Street history, involving one of the business world’s most colorful entrepreneurs who will turn to static contract language.
On Friday, Musk said he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information about fake or spam accounts on the platform, which is fundamental to its business performance.
Musk, who is the chief executive officer of electric vehicle maker Tesla Inc., did not immediately respond to a request for comment.
The lawsuit accused Musk of “a long list” of breaches of the merger agreement that have “cast a moment on Twitter and its business.” It said for the first time that employees’ leave has been “on the wane” since the deal was announced.
Twitter accused Musk of “secretly” accumulating shares in the company between January and March without disclosing his substantial purchases to regulators, and said he would “instead share Twitter stock with the market”. hoarding, no one is the wiser.”
Shares of the social media platform closed Tuesday at $34.06, up 4.3%, but well below the level above $50, where it traded when the deal was accepted by Twitter’s board in late April. The stock rose another 1% after the bell.
Musk said he was terminating the merger due to a lack of information and misrepresentations about spam accounts, which he said were a “material adverse event.” He also said the executive departure amounted to a failure to do business in the normal course — although Twitter said it removed that language from the merger contract during negotiations.
Twitter also said that it did not share more information about spam accounts with Musk because it feared it would create a competing platform after abandoning the acquisition.
Twitter called the reasons cited by Musk an “excuse” that lacked merit and said his decision to walk away had more to do with the downturn in the stock market, especially for tech stocks.
Tesla’s stock, the main source of Musk’s fortune, has lost nearly 30% of its value since the deal was announced and closed Tuesday at $699.21.
In a separate filing, Twitter asked the court to schedule a four-day trial in mid-September.
In a memo to Twitter staff on Tuesday, Twitter Chief Executive Parag Agarwal sought to reassure employees about the future.
“We will prove our position in court and we believe we will win,” he wrote in the note, which was seen by Reuters.
Legal experts have said that the information that is public is controlled by Twitter itself.
Boston College law professor Brian Quinn said, “Twitter is taking a strong position in its complaint that Musk had a buyer’s remorse case — and that, and not the bots, is the reason for his decision to walk away from the deal.” ” school. “The facts presented here by Twitter make a very strong argument in favor of Twitter closing this deal.”
Musk is among Twitter’s most-followed accounts and the lawsuit includes images of several of his tweets, including a poop emoji, which the company said violated the merger’s “non-disparagement” clause.
Musk tweeted the emoji on May 16 in response to a couple tweets from Agarwal about the company’s efforts to fight spam accounts.
It also included an image of a text message that Musk sent to Agarwal after Twitter sought assurances about Musk’s funding for the deal on June 28.
“Your lawyers are using these conversations to create trouble,” Musk wrote to Agarwal. “It needs to stop.”
After Twitter noted that Musk said he was terminating the deal, he sent tweets Monday that Twitter said his requests about spam were part of a plan to force the spam data into the public domain.
“For Musk, it appears, Twitter, the interests of its shareholders, the transaction Musk agreed to, and the court process to enforce it are all an elaborate joke,” the lawsuit said.