Image: Reuters Berita 24 English - Delaware Twitter Inc. filed a lawsuit against Elon Musk on Tuesday, accusing him of breaking the terms...
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| Image: Reuters |
Berita 24 English - Delaware Twitter Inc. filed a lawsuit against Elon Musk on Tuesday, accusing him of breaking the terms of his $44 billion agreement to purchase the social media platform. Twitter Inc. requested that a Delaware court order the world's richest man to complete the merger at the agreed-upon $54.20 per Twitter share.
The complaint stated that Musk "appears to assume that, unlike every other party subject to Delaware contract law, he is free to change his mind, trash the firm, disrupt its operations, destroy stockholder value, and walk away."
The lawsuit launches what is anticipated to be one of the largest legal showdowns in the history of Wall Street, featuring one of the most colourful businessmen in a case that will hinge on staid contract wording.
Musk announced the termination of the partnership on Friday, claiming that Twitter had broken the terms of the agreement by refusing to provide information about phoney or spam accounts on the platform, which is essential to the operation of the company.
The top executive of Tesla Inc.'s electric vehicle division, Musk, did not immediately return a call for comment.
The lawsuit said that Musk has broken "a long number" of merger agreement provisions, which "have put a shadow over Twitter and its business." For the first time, it claimed that since the announcement of the agreement, staff attrition had been "on the uptick."
Additionally, Twitter charged Musk of "secretly" purchasing shares of the business between January and March without properly informing regulators of his significant purchases, and said he "continued accumulating Twitter stock with the market none the wiser."
Twitter's shares finished at $34.06 on Tuesday, up 4.3 percent, but well below the levels around $50 where they were trading when the acquisition was approved by the board of directors in late April. When the bell rang, the stock rose by an additional 1%.
Musk declared that the absence of information concerning spam accounts and false statements, which he claimed amounted to a "material adverse event," was the reason he was cancelling the deal. Despite Twitter's claim that it eliminated that clause from the merger deal during discussions, he also claimed that management departures amounted to a failure to conduct business in the usual course.
Twitter also claimed that it withheld additional spam account information from Musk out of concern that he might quit the deal and launch a rival platform.
Twitter referred to Musk's justifications as a "pretext" that lacked substance and claimed his choice to go had more to do with the stock market's collapse, particularly for tech equities.
Since the announcement of the deal, the value of Tesla's stock, which is the main source of Musk's wealth, has decreased by over 30%. On Tuesday, the stock ended at $699.21.
Twitter urged the court in a second motion to set a four-day trial for mid-September.
Twitter CEO Parag Agrawal sought to reassure staff members about the future in a memo to the company's employees on Tuesday.
In the note, which was seen by Reuters, he stated, "We will prove our case in court and we believe we will succeed."
Legal experts have stated that based on the publicly available evidence, it appears that Twitter has the advantage.
According to Brian Quinn, a professor at Boston College Law School, "Twitter is taking a strong position that Musk had a case of buyer's remorse - and that, and not bots, is the cause for his decision to walk away from the agreement." The evidence Twitter provides here "makes a very strong case in support of Twitter closing this acquisition,"
One of the most popular Twitter accounts, Musk's tweets featured an emoji of a faeces, which the business said violated the merger's "non-disparagement" clause.
On May 16, Musk sent out the emoji in response to two tweets from Agrawal outlining the company's efforts to combat spam accounts.
Additionally, it featured a screenshot of a text message Musk wrote to Agrawal after Twitter on June 28 asked for clarifications regarding Musk's funding for the deal.
Musk texted Agrawal, "Your lawyers are using these chats to stir up trouble." "That has to end."
After announcing that he was ending the agreement, Musk tweeted on Monday, according to Twitter, suggesting that his requests for spam data were part of a larger scheme to drive junk data into the public domain.
The lawsuit said that for Musk, Twitter, the interests of its stockholders, the transaction he agreed to, and the legal procedure to execute it were all "extended jokes."
