According to court records, Twitter sued Elon Musk on Tuesday for breaking the $44 billion contract he made to purchase the tech company, calling his exit strategy “a model of hypocrisy.”
The lawsuit, which was filed in the US state of Delaware, asks the court to compel the billionaire to complete the purchase of Twitter, claiming that no monetary fine could undo the harm he has done.
The lawsuit claimed that Musk’s actions “clearly demonstrate that he seeks to escape the contractual contract he voluntarily signed, and to harm Twitter in the process.” As a result of the defendants’ violations, “Twitter has suffered and will continue to suffer irreparable harm.”
The announcement caused the shares of the social media company to marginally increase in after-market trade.
According to legal professionals and market analysts, Twitter will likely have the advantage in court, Wedbush analyst Dan Ives wrote in a note to investors.
Twitter’s board is eventually pushing Musk’s feet to the fire to complete the transaction at the agreed-upon price, Ives said. “This will be a Game of Thrones battle in court with the false account/bot issue front and center,” Ives added.
Since the soap opera started in April, “this has been a bad eye for Musk and a horror movie for Twitter (and its staff) with no winners.”
According to a letter from his attorneys that was filed in a US securities filing, Musk last week abandoned the agreement after making threats for weeks, accusing Twitter of making “misleading” claims about the amount of false accounts.
Musk criticized the firm on Twitter over the weekend after it stated it would litigate to enforce the arrangement in his first public comments since the announcement.
“I couldn’t buy Twitter, they claimed. Then they wouldn’t provide bot information. In court, they now want to order me to purchase Twitter. They must now divulge information about bots in court “he stated in a tweet that also featured images of Musk grinning gleefully.
After initially opposing a deal with the erratic billionaire entrepreneur, Twitter will now face a potentially protracted legal struggle as a result of the termination of the takeover agreement.
Twitter has defended its control over phony accounts and promised to compel Musk to finalize the agreement, which included a $1 billion breakup fee.
Musk disputes the social network’s claim that there are fewer than 5% bogus accounts, saying he thinks the number is significantly greater.
The lawsuit claimed that Twitter “has bent over sideways” to give Musk the information he has asked for, most notably the complete “firehose” data set that he has been mining for weeks.
“Defendants’ information requests were intended to try to kill the transaction from the outset,”
According to the lawsuit, Musk made his unsolicited proposal to acquire Twitter without requesting estimates for spam or phony accounts and even sweetened his offer by removing a diligence requirement.
The lawsuit claims that because Musk used a significant portion of his Tesla stock to support the financing for the deal, he would have to come up with additional cash or sell more stock if the electric car maker’s stock fell.
The statement added, “Not only were there no finance or diligence conditions, but Musk had already obtained financial pledges that, when combined with his own equity commitment, would be sufficient to fund the acquisition.
The lawsuit also stated that Musk’s capacity to renegotiate the purchase agreement for Twitter prior to the “drop-dead” date of October 24 of this year is severely constrained and that the completion is dependent largely on Twitter shareholders’ and regulatory approvals.
Observers of the CEO of Tesla and SpaceX were not surprised by his norm-defying behavior because he has a history of making statements that challenge or defy convention and occasionally result in regulatory action.
Although Twitter has requested the court to uphold the agreement, the company’s legal move may have a number of different effects.
The analyst wrote: “There are a number of outcomes that could result from the Delaware court, including settlement, breakup fee paid, contract enforced, and a variety of other events.”
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