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Despite Musk’s claims that he is cancelling the transaction, Twitter (TWTR) has followed through on its threat to sue Elon Musk and maybe persuade him to buy the social media giant.
On July 12, Twitter filed a lawsuit in Delaware Chancery Court, the nation’s premier venue for business disputes, requesting that one of its chancellor’s order Musk to fulfil his commitment to acquiring the business as stated in their merger agreement on April 25. According to the agreement, Musk agreed to pay $54.20 per share, or $44 billion, for the company’s outstanding common stock. Tuesday saw Twitter’s share price hovering around $34.
Twitter claims in the breach-of-contract lawsuit that 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.
[quotation name=’Elon Musk’]Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement,” Twitter claims.[/quotation]
having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement,” Twitter claims
Since Musk’s efforts could cause irreparable injury to the social media firm and its staff, Twitter is requesting “swift” action from the court to compel Musk to purchase the company.
Elon Musk and Twitter have been contacted, but we haven’t heard back right away.
In order to facilitate his financing and financial planning for the transaction, Musk claims that Twitter violated several terms of their agreement by withholding data that would have allowed him to independently assess the number of fictitious accounts on the platform.
According to Elon Musk, this information is essential to Twitter’s business and financial performance.
Twitter claims in its lawsuit that Musk was merely looking “for an exit” when the market and Twitter both started to decline after he agreed to buy the business.
[quotation name=’Elon Musk’]“Musk wanted an escape. But the merger agreement left him little room” the complaint said.[/quotation]
The arrangement calls for a $1 billion reverse breakup fee that would let Musk out of the contract, but only under particular circumstances, such as if his debt funding failed or if regulatory authorities prevented the merger.
Musk revealed on April 4 that he intended to buy Twitter by acquiring all of its existing shares, which led to the creation of the in question agreement. Early on, Musk was very explicit about his two main motivations for buying the social media company: putting an end to “spam bot” accounts that were fraudulent and encouraging more free expression.
His share price of $54.20 was a 38 per cent premium above Twitter’s stock price as of April 1, 2022, when the market closed. Elon Musk said in a Tweet on May 13 that the deal might be in jeopardy.
According to him, the agreement had been put on hold while Twitter’s claims that less than 5% of accounts with monetizable daily active users are false were verified. Some have hypothesized that Musk is using Twitter’s fake-account problem as a justification for not making a bear market acquisition — especially because he should have been aware of it long before making his bid for the business.
Elon Musk, on the other hand, has hypothesized that up to 20% of Twitter accounts may be bots, but he claims he is unable to confirm whether he is correct or Twitter is lacking the necessary data.
According to The Washington Post, Twitter gave Musk access to more than 500 million tweets and related data, although the firm has stated that it is forbidden from sharing privileged internal information with other parties due to concerns about user privacy.
Musk has 20 days after being served with Twitter’s complaint to respond to its allegations unless the court decrees differently.