Twitter sues Musk over collapsed $44bn takeover
Twitter has filed a lawsuit against Elon Musk after the billionaire cancelled his proposed $44 billion takeover of the social media giant.
Musk canned the acquisition earlier this week, accusing Twitter of failing to provide important information around the number of bots and fake accounts on the platform, something Twitter has denied.
The social media company is now taking legal action against the Tesla boss in an effort to force through the acquisition. In its filing with a Delaware court, the company argued Musk must honour his agreement to buy Twitter at $0.54 a share, following a “long list of material contractual breaches” which had “cast a pall over Twitter and its business”.
Because the deal included a provision called a “specific performance clause”, the court could force Musk to buy the company as long as he has financing in place, which he claimed to have secured in May.
“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he, unlike every party subject to Delaware contract law, is free to change his mind, trash the company, disrupt its operations, destroy stockholder value and walk away,” the company stated in the lawsuit.
It further argued Musk had decided to pull out after seeing shares in his electric car company Tesla plummet after the deal for Twitter was announced. Musk was planning to offload shares in his electric vehicle firm in order to fund the acquisition, but Tesla stock has declined by more than $100 billion from a peak in November 2021.
“Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter’s shareholders,” the company claimed.
Musk could also be forced to pay a $1bn exit fee for walking away from the deal, a penalty he indicated in a filing to the Securities and Exchange Commission he is seeking to evade. Should the SEC determine the Tesla boss is required to make the payment, and he refuses, Musk would face severe penalties, such as being banned from leading several of the companies he runs, such as Tesla and SpaceX.
Musk has been a vocal critic of Twitter, despite also being one of the platform’s most prominent and prolific users. Even after agreeing a deal to buy the company, Musk criticised Twitter’s policy on removing what it claims is harmful content.
When pulling the plug on the deal, Musk’s representatives explained: “Sometimes Twitter has ignored Mr Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified and sometimes it has claimed to comply while giving Mr Musk incomplete or unusable information.”
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