Twitter has sued billionaire Elon Musk in an effort to force him to follow through with his deal to buy the social media company says CNN.
- The lawsuit was filed in the Delaware Court of Chancery on Tuesday after Musk said in a letter to Twitter’s top lawyer late Friday.
- It said that he wanted to terminate the blockbuster$44 billion acquisition agreement.
Agreement
Musk’s lawyer alleged in Friday’s letter that Twitter is “in material breach of multiple provisions” of the deal. Musk requested an order to evaluate the number of bots and spam accounts on the platform. Twitter’s legal team hit back, calling Musk’s attempted termination “invalid and wrongful.” They claimed that Musk himself violated the agreement. As claimed by the Twitter lawsuit, “In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done,” the complaint states. “Now, less than three months later, Musk refuses to honour his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”
Confrontation
“Oh the irony lol.” tweeted Musk post the statement came out. Both the parties will now have to deal with a long court procedure. Some analysts, however, have suggested that Musk simply wants an excuse to get out of a deal. This is because of the overpricing considering the fall in the Twitter shares in the overall tech market. Even the TESLA shares have declined sharply. Twitter said, “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.”
Overpricing
Indeed, Twitter is trading 34% below its price the day Twitter and Musk struck the deal. It is 37% below Musk’s offer price. This suggests deep scepticism about the deal getting done, at least at its original price. The sale price in the agreement, $54.20 per outstanding share, represented a 38% premium over the stock price. This was the day before Musk revealed his stake. In the filing, Twitter took issue with several of the ways in which Musk has accused the company of violating the acquisition agreement, including the claim in his Friday letter that Twitter breached the deal by letting go of two senior executives last month. Twitter claims Musk wanted the merger agreement to state the company could not hire or fire employees at or above the level of vice president, or “above a presumptive violation of the ordinary course covenant,” without Musk’s consent. “Twitter successfully struck that provision before signing,” the complaint states.
Complain
Twitter filed a motion to expedite proceedings in the case, requesting a four-day trial on the dispute. “Expedition is essential to permit Twitter to secure the benefit of its bargain, to address Musk’s continuing breaches, and to protect Twitter and its stockholders from the continuing market risk and operational harm resulting from Musk’s attempt to bully his way out of an airtight merger agreement,” the filing states.
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Source: CNN
