Wilmington, Delaware: Twitter Inc sued Elon Musk on Tuesday for violating the $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 Twitter share, according to a court filing.
“Musk apparently 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,” said the lawsuit.
The lawsuit sets in motion what promises to be one of the biggest legal showdowns in Wall Street history, involving one of the business world’s most colorful entrepreneurs in a case that will turn on staid contract language.
Musk reacts after Twitter sues him
Tesla CEO Elon Musk was quick enough to react to a lawsuit filed against him by Twitter for breaching the USD 44 billion contract.
Minutes after news surfaced online that Twitter has sued him, Musk took to the microblogging site and just simply tweeted, "Oh the irony lol."
While his tweet did not mention the lawsuit, it was apparent that he was referring to it, considering that, back in April, Twitter reportedly did not even want to go through with the deal.
On Friday, Musk said he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platforms, which is fundamental to its business performance.
The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business.” Shares of the social media platform closed at $34.06 on Tuesday, up 4.3 per cent, but sharply below the levels above $50 where it traded when the deal was accepted by Twitter’s board in late April.
Musk said he was terminating the merger because of the lack of information about spam accounts and inaccurate representations that he said amounted to a “material adverse event.” He also said executive departures amounted to a failure to conduct business in the ordinary course, as Twitter was obligated to do.
Twitter said it negotiated to remove from the merger agreement language that would have made such firings a violation of ordinary course requirement.
Twitter called the reasons cited by Musk a “pretext” that lacked merit and said his decision to walk away had more to do with a decline in the stock market, particularly for tech stocks.
Tesla’s stock, the main source of Musk’s fortune, has lost 30 per cent of its value since the deal was announced and closed on Tuesday at $699.21.
Legal experts have said that from the information that is public Twitter would appear to have the upper hand because of the way Musk negotiated the deal, declining to do traditional pre-merger diligence.