June 2, 2023

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Twitter sues Elon Musk for holding him to a $44 billion deal

Twitter sues Elon Musk for holding him to a $44 billion deal

Wilmington, Dale. , July 12 (Reuters) – Twitter Inc. (TWTR.N) He sued Elon Musk on Tuesday for violating 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 $54.20 per Twitter share.

“Musk apparently believes that – unlike any other party subject to Delaware contract law – he is free to change his mind, screw up the company, disrupt its operations, destroy shareholder value, and walk away,” the complaint said.

The lawsuit stirs what promises to be one of the largest legal confrontations in Wall Street history, involving one of the world’s most vibrant entrepreneurs in a case that will play into the well-established language of contract.

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On Friday, Musk said he terminated the deal because Twitter violated the agreement by not responding to requests for information about fake accounts or spam on the platform, which is essential to its business. Read more

Musk, CEO of electric car maker Tesla, did not immediately respond to a request for comment.

The lawsuit accused Musk of a “long list” of merger agreement violations that “cast a shadow over Twitter and its business.” It said for the first time that staffing had been “on the rise” since the deal was announced.

Twitter also accused Musk of “secretly” hoarding shares in the company between January and March without properly disclosing his large purchases to regulators, and said he “instead continued hoarding Twitter stock even though the market wasn’t wiser.”

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Shares of the social media platform closed at $34.06 Tuesday, up 4.3%, but sharply below levels above $50 where they traded when the deal was accepted by Twitter’s board of directors in late April. The stock added another 1% after the bell.

Musk said he terminated the merger due to a lack of information about spam accounts and inaccurate declarations, which he said amounted to a “material adverse event.” He also said the executives’ departure amounted to a failure to run the business in the normal course – although Twitter said it omitted that language from the merger contract during negotiations.

Twitter also said it has not shared more information with Musk regarding the spam accounts because it fears it will build a competing platform after abandoning the acquisition.

Twitter described Musk’s reasons as an “excuse” lacking merit, and said his decision to withdraw was more closely related to the stock market’s slump, especially for tech stocks.

Tesla stock, Musk’s main source of wealth, has lost about 30% of its value since the deal was announced and closed Tuesday at $699.21.

In a separate file, Twitter asked the court to schedule a four-day trial for mid-September.

In a note to Twitter employees on Tuesday, CEO Parag Agrawal sought to reassure employees about the future.

“We will prove our position in court and believe we will prevail,” he wrote in the memo, seen by Reuters.

Legal experts said that from public information, Twitter appears to have the upper hand. Read more

β€œIn her complaint, Twitter takes a strong position that Musk has buyer remorse β€” and that, not the bots, is the reason for his decision to walk away from the deal,” said Brian Quinn, a professor at Boston College Law. The school. “The facts Twitter presents here make a very strong case for Twitter to complete this deal.”

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Musk was among the most followed Twitter accounts, and the lawsuit included images of several of his tweets, including a poo emoji, which the company said violated the merger’s “no-distraction” clause.

Musk tweeted the emoji on May 16 in response to a pair of tweets from Agrawal, explaining the company’s efforts to combat spam accounts.

It also included an image of a text message Musk sent Agrawal after Twitter on June 28 requested reassurances about Musk’s financing of the deal.

Musk texted Agrawal: “Your lawyers are using these conversations to make trouble.” “This has to stop.”

Twitter noted that after Musk said he had terminated the deal, he sent out tweets on Monday in which Twitter said his spam requests were part of a plan to force spam data into the public domain.

“For Musk, it appears that Twitter, the interests of its shareholders, the deal that Musk agreed to, and the court process to enforce it, are all a complicated joke,” the lawsuit said.

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Additional reporting by Tom Hales in Wilmington, Delaware. Editing by Chris Reese, Nolin Walder and Matthew Lewis

Our criteria: Thomson Reuters Trust Principles.