Twitter sues Elon Musk to force him to complete acquisition

New York
CNN Business

Twitter has sued billionaire Elon Musk in an attempt to force him to push through his deal to buy the social media company.

The lawsuit, filed Tuesday in the Delaware Court of Chancery, comes after Musk said in a letter to Twitter’s top attorney late Friday that he wants to end the blockbuster $44 billion acquisition deal.

Musk’s lawyer claimed in Friday’s letter that Twitter (TWTR) is “in material violation of multiple provisions” of the deal, alleging that the company withheld data requested by Musk to determine the number of bots and spam accounts on the platform. to evaluate. Twitter’s (TWTR) legal team responded in a letter Monday, calling Musk’s attempted termination “void and unlawful,” alleging that Musk himself had breached the agreement and demanded that he honor the deal.

In the complaint filed Tuesday, Twitter’s attorneys say they want to prevent Musk from further violating the agreement, and that they will “enforce completion of the merger if the few outstanding conditions are met.”

“In April 2022, Elon Musk signed a binding merger agreement with Twitter, promising to do his utmost to complete the deal,” the indictment said. Now, less than three months later, Musk is refusing to honor his obligations to Twitter and its shareholders because the deal he signed no longer serves his personal interests.

Shortly after news of the indictment was filed, Musk . said tweeted“Oh the irony lol.” Musk did not immediately respond to a request for comment from CNN.

The deal is now likely heading for a lengthy legal battle to determine whether Twitter can force Musk to close the deal and take ownership of it, or at least make him pay the $1 billion that was in the original agreement as termination fee. fixed.

After initially saying he wanted to buy Twitter to stamp out bots, Musk has in recent weeks expressed concern (without any clear evidence) that there are more bots on the platform than Twitter has publicly reported.

However, some analysts have suggested that Musk just wants an excuse to get out of a deal that now seems too expensive after the downturn in Twitter stocks and the overall tech market. Tesla (TSLA) shares, which Musk partially relies on to fund the deal, have also fallen sharply since he agreed to the deal.

Twitter said in its Tuesday indictment that, after mounting a public spectacle to bring Twitter into play and proposing and then signing a seller-friendly merger agreement, Musk apparently believes that — unlike any other party subject to contract law of Delaware – is free to change your mind, destroy the company, disrupt operations, destroy shareholder value, and walk away.”

It later adds that Musk’s efforts to end the deal and his “contempt for Twitter and its staff … expose Twitter to adverse effects on its business, employees and stock price.”

Indeed, Twitter’s share, which gained about 4% on Tuesday after falling sharply on Monday, is trading 34% below its price on the day Twitter and Musk closed the deal, and 37% below Musk’s offer price, indicating deep skepticism about closing the deal. , at least at the original price. The sale price in the deal, $54.20 per share outstanding, represented a 38% premium over the share price the day before Musk disclosed his stake in the company.

Very little about the process of Musk and Twitter pursuing a deal is typical of corporate merger and acquisition standards, and Tuesday’s complaint to enforce the deal — which is replete with references to tweets, memes, and a nod to the poo emoji – shows how bizarre it’s been.

For example, the document references Musk’s tweets in the days leading up to the deal, in which he appeared to hint at launching a hostile takeover bid by tweeting “Love Me Tender” and a blank followed by “is the night”. It also pointed to a Monday tweet from Musk featuring images of Musk smiling and suggesting that if Twitter sued him to enforce the deal, it would have to reveal the data on bots he had asked for in court.

“To Musk, it appears that Twitter, the interests of its shareholders, the transaction Musk agreed to and the legal process to enforce it are all an elaborate joke,” the indictment said.

In the filing, Twitter addressed several ways Musk has accused the company of violating the acquisition agreement, including alleging in its Friday letter that Twitter violated the deal by letting go of two senior executives last month. Twitter alleges that Musk wanted the merger agreement to state that the company could not hire or fire employees at or above the vice president level, or “above a suspected breach of the Covenant in the ordinary course of business,” without the approval of the company. musk. “Twitter successfully broke that provision before it was signed,” the indictment said.

In conjunction with the complaint, Twitter filed a motion to speed up proceedings in the case and requested a four-day trial over the dispute to be concluded in September.

“Expedition is essential to enable Twitter to secure the benefit of its agreement, address Musk’s ongoing breaches, and protect Twitter and its shareholders from the lingering market risk and operational damage resulting from Musk’s attempt to out of an airtight merger agreement,” the file reads.

Share is Love^^