Technology
Tuesday, July 12th, 2022 3:37 pm EDT
Twitter filed suit against Elon Musk in the Delaware Court of Chancery on Tuesday after the billionaire said he was terminating his $44 billion deal to buy the company.
Twitter said Musk, after entering a binding merger agreement, now “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”
Twitter’s suit was expected after Musk said late last week that he no longer plans to buy the social network, citing Twitter bots and claiming that the company didn’t give him the information he needed to evaluate the deal.
The lawsuit filed on Tuesday marks the beginning of what could be a protracted legal battle as Twitter seeks to hold Musk to his deal to pay $54.20 per share for the company, and as Musk seeks to be let out of the agreement.
The outcome of the dispute could be unpredictable, legal experts say, and could involve a judge forcing Musk to complete the deal or forcing him to pay a $1 billion breakup fee, or other scenarios including a settlement, renegotiation of the purchase price, or even Musk walking away without paying anything.
Twitter is seeking a four-day trial in September, according to a court filing.
In the suit filed Tuesday, Twitter argued that Musk’s conduct during his pursuit of the social network was in “bad faith” and accused the Tesla CEO of acting against the deal since “the market started turning.”
“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 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,” Twitter wrote in the complaint.
“This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business,” Twitter wrote in its suit.
The suit claims that what Musk says about why he wants to terminate the deal, including the prevalence of bots on the service, are “pretexts.”
Musk announced plans to buy Twitter for $54.20 per share in April. The stock was trading at just over $34 per share at Tuesday’s close, which is over 37% lower than Musk’s offer.
Twitter attributes the decline partially to Musk’s actions, although other social media companies have also seen their share prices slide during the same period.
“Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price,” Twitter said in its suit.
Twitter filed the suit to “hold Elon Musk accountable to his contractual obligations,” Twitter board chair Bret Taylor tweeted.
“Oh the irony lol,” Musk tweeted after Twitter’s filing.
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