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Twitter Sues Elon Musk for Attempting to Abandon Acquisition

Twitter Sues Elon Musk for Attempting to Abandon Acquisition
Source: Verge

Elon Musk and Twitter are now in court. On Tuesday, the social media business sued the richest man in the world, claiming that he is refusing to “respect his commitments” under their contract and that they should force him to fulfill those obligations. Based on his assertions that Twitter has not complied with his demands for information regarding bot activity and spam on the network, Musk is attempting to withdraw from the $44 billion acquisition agreement they announced on April 25th.

According to Twitter’s lawsuit, which was filed in the Delaware Court of Chancery, where the business is incorporated, “Twitter brings this action to enjoin Musk from further breaches, to compel Musk to fulfill his legal obligations, and to compel consummation of the merger upon satisfaction of the few outstanding conditions.” Twitter board chairman Bret Taylor stated in a quick tweet that the lawsuit aims to “hold Elon Musk responsible,” while Twitter spokesperson Catherine Hill was silent beyond the court filing.

Musk reacted with his own post shortly after Twitter filed the lawsuit, writing, “Oh the irony lol.”

According to the complaint, Musk went above and beyond to extend an unexpectedly substantial offer to Twitter, only to turn around and play with the prospect of ending their contract nearly immediately. Twitter claims that Musk sought a way out of the arrangement, which needed a “substantial adverse effect” or breach of contract, once the market flipped and tech stocks started to fall. According to the lawsuit, “Musk had to try to conjure one of those.”

According to the complaint, it is where Musk’s claim that Twitter had a spam bot issue originated from. Despite his worries, the complaint asserts that Musk failed to query Twitter over its estimates of spam prior to the arrangement. According to the lawsuit, “he even sweetened his offer” by deleting a diligence requirement from the contract that would have allowed him access to the company’s non-public information.

The CEO of Twitter, Parag Agrawal, has posted threads explaining how the firm determines how many people are active each day. Twitter recently informed reporters that it removes 1 million spam accounts each day. Many of Musk’s own tweets were highlighted in the complaint, including his public request for an SEC inquiry, the poop emoji he used to respond to CEO Parag Agrawal, and jokes Musk sent over the weekend.

Twitter’s lawsuit is replete with information on the conversations that took place between Musk’s team and Twitter management over the previous few months, including messages that Musk recently sent to Twitter’s CEO and CFO ordering them to halt looking into the deal’s funding status.

It makes a point to emphasize that Twitter granted Musk access to its ‘firehose’ of tweet data and more information on bots than he was entitled to under the terms of the agreement. Twitter’s attorneys describe Musk’s counsel’s request for executive emails and texts on the matter as “very unusual” given his earlier choice to forego due diligence. Musk’s counsel reportedly sought more than that.

Employee turnover has increased “after the signing of the merger agreement,” according to the lawsuit, and morale at Twitter has suffered significantly as a result of the transaction with Musk. While the acquisition was being finalized, Twitter claims Musk obstructed its attempts to implement compensation plans to keep top staff. (Prior to withdrawing, Musk made it known that if his offer was accepted, Twitter would see layoffs.)

In an internal message on Tuesday night, Twitter CEO Parag Agrawal made an effort to allay staff fears and urged them to read the lawsuit. According to the email received by Mike Issac of The New York Times, he says, “We used this opportunity to share our narrative and defend our firm, our staff, and our stockholders.”

Twitter wants its appeal heard before October 24th because the merger deal with Musk had a “drop-dead” date for expiry. According to a second request to expedite filed by the firm, it is seeking to have its case tried in only four days in the middle of September.

Twitter has retained the legal services of Wachtell, Lipton, Rosen & Katz, a formidable firm with strong ties to the Delaware Court of Chancery and a track record of handling important business litigation, to oppose Musk.