Twitter sue Elon Musk for Abandoning $44 billion Takeover Transaction
Twitter sue Elon Musk for Abandoning $44 billion Takeover Transaction
Twitter’s attorneys filed a complaint on Tuesday, accusing Musk of “refusing to honor his duties.” The lawsuit was brought in Delaware’s Chancery Court, where Twitter is incorporated.
The lawsuit centers on Musk’s last-week attempt to “terminate” the merger agreement he signed in April by proposing to buy Twitter and take it private for $54.20 per share, which would value the transaction at $44 billion. Over the weekend, attorneys for Twitter referred to Musk’s action as “invalid and unlawful.”
Musk withdrew from the agreement in a letter, accusing Twitter of making choices to fire key executives and perform layoffs without his consent, lying to him and the SEC about the amount of “bots” or spam accounts on the network, and refusing to provide “useable” user data. According to Musk’s attorneys, each of these purportedly represents a “breach” of the contract. Consequently, he can back out of the arrangement without even having to pay the $1 billion break-up fee that is stipulated in it.
All of those arguments were refuted by Twitter in its complaint, which it described as “pretexts” that “without any merit.” It said that Musk’s merger agreement from April is not only legally “binding” and that he must complete the transaction as planned, but also that he is only trying to back out of the arrangement at this point “because it no longer serves his personal interests.”
Soon after the complaint was filed, Musk appeared to comment to it on Twitter, writing simply “Oh the irony lol.”
Twitter’s attorneys cited Musk’s personal fortune, which is mostly invested in Tesla shares, the price of which has plunged 44% this year along with other tech equities. They said that since late last year, the value of his Tesla stock had decreased by more than $100 billion. Now that the stock market has declined, Musk merely “wants out” of his deal to purchase Twitter and wants to “transfer the expense” of the decline onto Twitter’s stockholders.
According to lawyers for Twitter, Musk “appears to believe 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.” Musk mounted a public spectacle to put Twitter in play. He also proposed and later signed a seller-friendly merger agreement. This rejection comes after a long number of significant contractual breaches by Musk that have negatively impacted Twitter’s operations.
Lawyers cited a number of Musk’s tweets that discussed the acquisition and certain Twitter personnel, claiming that each of them violated the agreement’s secrecy and defamation restrictions. They assert that he did not respond “reasonably” to previous queries or offer reasonable information about how he was financing the transaction.
