WILMINGTON, Del., July 12 (Reuters) – Twitter Inc. (TWTR.N) sued Elon Musk on Tuesday for breaching his $44 billion deal to buy the social media platform and asked a Delaware court to order the world’s richest person to complete the merger at the agreed $54.20 per share. from Twitter.
“Musk apparently believes that he, unlike any other party subject to Delaware contract law, is free to change his mind, destroy the company, discontinue operations, destroy shareholder value, and walk away,” the complaint says. .
The lawsuit sets in motion what promises to be one of the biggest legal showdowns in Wall Street history, involving one of the corporate world’s most colorful entrepreneurs in a case that will escalate into serious contract language.
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On Friday, Musk said he was backing out of the deal because Twitter violated the deal by not responding to requests for information about fake or spam accounts on the platform, which is critical to its business performance. read more
Musk, who is the CEO of electric vehicle maker Tesla Inc, did not immediately respond to a request for comment.
The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have tarnished Twitter and its business.” He said for the first time that employee attrition has been “on the rise” since the deal was announced.
Twitter also accused Musk of “secretly” accumulating shares in the company between January and March without properly disclosing his substantial purchases to regulators, saying that he “instead continued to accumulate shares of Twitter without the market finding out.”
Shares of the social media platform closed at $34.06 on Tuesday, up 4.3% but well below the $50-plus levels it was trading at when Twitter’s board accepted the deal. end of april. The stock added another 1% after the bell.
Musk said he would end the merger due to underreporting of spam accounts and misrepresentations that he said amounted to a “material adverse event.” He also said the executive departures amounted to a failure to conduct business in the normal course, though Twitter said it removed that language from the merger contract during negotiations.
Twitter also said it didn’t share more information with Musk about the spam accounts because it feared Musk would build a competing platform after abandoning the acquisition.
Twitter called the reasons cited by Musk a “pretext” that lacked merit and said his decision to pull out had more to do with a downturn in the stock market, particularly for tech stocks.
Shares of Tesla, the main source of Musk’s fortune, have lost about 30% of their value since the deal was announced, closing Tuesday at $699.21.
In a separate filing, Twitter asked the court to schedule a four-day trial in mid-September.
Legal experts have said that from the information that is public, Twitter appears to have the upper hand. read more
“In its complaint, Twitter is taking a strong position that Musk had a case of buyer’s remorse, and that, and not the bots, is the reason for his decision to back out of the deal,” said Brian Quinn, a professor at Boston College. Law. school. “The facts that Twitter presents here make an extremely strong argument in favor of Twitter closing this deal.”
Musk is among the most followed accounts on Twitter and the lawsuit included images of several of his tweets, including a poop emoji, which the company said violated the “no disparagement” clause of the merger.
Musk tweeted the emoji on May 16 in response to a pair of tweets from Parag Agrawal, Twitter’s CEO, explaining the company’s efforts to combat spam accounts.
It also included an image of a text message Musk sent to Agrawal after Twitter sought assurances on June 28 about Musk’s funding for the deal.
“Your lawyers are using these conversations to cause trouble,” he texted Agrawal. “That has to stop.”
Twitter noted that after Musk said he was terminating the deal, he sent out tweets on Monday that Twitter said suggested his spam requests were part of a plan to force spam data into the public sphere.
“It would appear that for Musk, Twitter, the interests of its shareholders, the transaction that Musk agreed to, and the court process to enforce this all constitute an elaborate joke,” the suit says.
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Reporting from Tom Hals in Wilmington, Delaware; Edited by Chris Reese, Noeleen Walder and Matthew Lewis
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