Twitter filed a lawsuit Tuesday against Elon Musk after the billionaire backed out of a $44 billion deal to buy a social media company.
In April, Musk agreed to buy Twitter. but he filed on friday with the Securities and Exchange Commission to withdraw from the acquisition agreement. Now a Delaware court can determine whether it should buy a company whose stock and reputation have plummeted.
In its lawsuit, Twitter claims that Musk signed a binding agreement to the deal and cannot simply walk away from it.
“Musk refuses to fulfill his obligations to Twitter and its shareholders because the deal he signed no longer serves his personal interests,” Twitter said in the lawsuit. “Obviously, Musk believes that he—unlike any other party subject to Delaware contract law—is free to change his mind, crash the company, disrupt its operations, destroy shareholder value, and leave.”
In classic Musk fashion, he responded to the Twitter lawsuit with a tweet saying, “Oh, irony, lol.”
On Sunday, Twitter lawyers wrote in a letter that Musk’s attempt to terminate the deal was “void and unlawful” and that he “knowingly, willfully, willfully and materially violated” the deal to buy the platform.
The Twitter lawsuit was filed after Musk accused the company of refusing to provide information about the number of spam bots on the platform. Musk has repeatedly criticized Twitter, stating that he does not believe its public claims that about 5% of its active users are bots.
Twitter claims otherwise and said it provided Musk and his team with “much more information” than they are entitled to under the merger agreement.
“Twitter went out of its way to provide Musk with the information he requested, including, most notably, the full ‘fire’ data set, which he has been mining for weeks — and has been mining since he intended to stop — using reviewers of undisclosed data,” the lawsuit says. “Musk’s behavior simply confirms that he wants to avoid a binding contract he voluntarily signed and hurt Twitter in the process.”
Twitter has already warned Musk about the lawsuit
The news that the microblogging company is suing Musk over the deal came as no surprise to its shareholders.
Twitter warned of possible legal costs associated with the deal in his last quarterly 10-Q filing with the SEC that company stakeholders should prepare for potentially costly litigation.
“Regardless of the outcome of any future merger-related litigation, such litigation could be time-consuming and costly and could distract our management from the day-to-day operations of our business,” Twitter said in a statement. “Litigation costs and the diversion of management’s attention and resources to claims and counterclaims in any merger-related litigation could have a material adverse effect on our business, results of operations, prospects, cash flows and financial condition.
“If the merger is not completed for any reason, a lawsuit may be filed due to the failure to complete the merger,” the statement said.
It also said they expect the Musk deal, or any litigation surrounding the deal, to possibly scare off advertisers, put pressure on its share price, and lead to a talent drain:
“Any litigation relating to the merger could result in negative publicity or an adverse impression of us, which could adversely affect the price of our common stock, impair our ability to hire or retain employees, damage our relationships with our advertisers and other business partners, or otherwise cause material harm to our operations and financial performance.”
This is an evolving story.
Credit: www.usatoday.com /