On Tuesday, Twitter sued Elon Musk for violating his $44 billion deal to purchase Twitter and told a Delaware court to order him to finish the merger at the concluded $54.20 per Twitter share.
The complaint says “Musk 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.”
This lawsuit promises to be a very big legal battle in the history of Wall Street, involving one of the world’s richest men and most colorful entrepreneurs.
Last Friday, the Tesla CEO disclosed he’s terminating the deal because the social media platform violated the plan by not responding to demands for information about spam or fake accounts on Twitter.
The lawsuit accused the billionaire of violating the merger agreement that “has cast a pall over Twitter and its business.” The lawsuit states that staff attrition has been on the upswing after the deal’s announcement.
Also, Twitter accused the CEO of secretly collecting shares from the platform between January and March without appropriately revealing his substantial buys to regulators. Musk, instead, kept accumulating Twitter stock with the market none the wiser.
Categorically, the Tesla CEO disclosed he’s terminating the merger due to the lack of information on fake/spam accounts plus incorrect representations amounting to a “material adverse event.”
Musk also expressed that executive departures signified a failure to do business using the ordinary course, though the social media platform said it had removed the language from the merger contract in the negotiations.
The platform equally said it didn’t share more details with Musk concerning spam accounts because it feared he’d create a competing social media platform after leaving the acquisition.
Twitter termed the reasons stated by Musk as a “pretext” that lacked merit. According to Twitter officials, Musk’s decision to abandon the deal has to do with the stock market fall, especially the tech stocks.
The major source of Musk’s wealth, Tesla’s stock, lost about 30% of value since the Twitter deal was revealed and ended on Tuesday at $699.21.
Twitter officials have also asked the court to create a 4-day trial in September in a different filing.
In the meantime, Twitter Chief Executive Parag Agrawal, on Tuesday, reassured its staff about the future. He said, “We will prove our position in court, and we believe we will prevail.”
Others believe Twitter may win the lawsuit
Legal experts and observants have opinionated that Twitter might have the upper hand in the lawsuit from the available information.
In his opinion, Brian Quinn, a professor at Boston College Law School, says, “In its complaint, Twitter is taking a strong position that Musk had a case of buyer’s remorse. The facts Twitter presents here make an extremely strong argument in favor of Twitter getting this deal closed.”