Twitter sues Elon Musk, says he can't 'destroy the company...and walk away'

Enlarge Aurich Lawson | Patrick Pleul/dpa-Zentralbild/ZB

Twitter filed its planned lawsuit against Elon Musk on Tuesday, demanding that he complete the $44 billion purchase of the social network.

“Musk refuses to honor his obligations to Twitter and its shareholders because the agreement he signed no longer serves his personal interests,” the lawsuit states. “Having staged a public spectacle to put Twitter on the line, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he – unlike any other party subject to Delaware contract law – is free to change his mind. 'opinion, to throw the company, disrupt its operations, destroy shareholder value and walk away."

The lawsuit outlines "a long list of material breaches of contract by Musk that cast a veil over Twitter and its business" and asked the court "to compel the completion of the merger upon satisfaction of a few outstanding conditions" . The lawsuit points out that in the purchase agreement, "Twitter negotiated for itself a strong right to require specific performance of the terms of the agreement which included the right to compel the defendants to enter into the agreement, and ensured that Musk was personally bound by this provision (amongst others)."

The lawsuit was filed Tuesday in the Delaware Court of Chancery.

Musk's unsolicited, 'seller-friendly' offer

The lawsuit describes how Musk made an unsolicited offer to buy Twitter for $54.20 per share, a "take it or leave it" offer that "represented a 38% premium to the stock price. unassigned from Twitter".

“Other terms offered and agreed to by Musk were, as he put it, ‘favourable to the seller’. There are no financing contingencies or due diligence conditions. The deal is backed by covenants airtight debt and equity. Musk personally committed $33.5 billion," Twitter's complaint said.

But the market fell after the deal was signed, and "the value of Musk's stake in Tesla, the anchor of his personal wealth, has shrunk by more than $100 billion from its November 2021 peak,” the lawsuit states. "So Musk wants out. Rather than bear the cost of the market downturn, as required by the merger agreement, Musk wants to transfer it to Twitter shareholders. This is consistent with the tactic deployed by Musk against Twitter and its shareholders. since the start of this year, when he began amassing an undisclosed stake in the company and continued to grow his position without notification required."

Since agreeing to buy the company, Musk has also "repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its stock price," says the complaint.

"Model of Hypocrisy"

"Musk's exit strategy is a model of hypocrisy," the lawsuit continued, pointing out that one of Musk's primary reasons for buying Twitter "was to rid it of '[c]rypto spam' which he considered a 'major blight on the user experience.' Musk said he had to take the company private because he believed deleting spam would otherwise be commercially unfeasible." In the press release announcing the deal, Musk said his goals include "defeating spambots and authenticating all humans".

Musk made his offer to buy Twitter "without seeking any representations from Twitter regarding his estimates of spam or fake accounts", and "even sweetened his offer to Twitter's board by expressly withdrawing his condition due diligence,” the lawsuit states. But after the market crash, Musk began to question Twitter's spam estimates and eventually claimed that Twitter broke the merger agreement by not providing all the spam data it requested. p>

"Musk changed his narrative, suddenly demanding 'verification' that spam was not a serious issue on Twitter's platform, and asserting a compelling need for 'due diligence' which he expressly renounced “, states the complaint.

Musk centered the dispute on Twitter's estimate that less than 5% of monetizable daily active users (mDAUs) are spam or fake. "Musk wanted to get away. But the merger deal left little room for him," the complaint said. "Absent a funding contingency or a due diligence condition, the deal gave Musk no way out absent a material adverse effect on society or a...