Twitter files suit to force Musk to complete sale
Company says Tesla, SpaceX CEO cannot back out of $44B deal
Twitter sued Tesla and SpaceX CEO Elon Musk on Tuesday to force him to complete the $44 billion acquisition of the social media company.
Musk and Twitter have been bracing for a legal fight since the billionaire said Friday he was backing off of his April agreement to buy the company.
Twitter’s lawsuit opens with a sharply-worded accusation: “Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”
“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently 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,” the suit said.
Twitter filed its lawsuit in the Delaware Court of Chancery, which frequently handles business disputes among the many corporations, including Twitter, that are incorporated there.
As part of the April deal, Musk and Twitter had agreed to pay each other a $1 billion breakup fee if either was responsible for the deal falling through. The company could have pushed Musk to pay the hefty fee but is going further than that, trying to force him to complete the full $44 billion purchase approved by the company’s board.
“Oh the irony lol,” Musk tweeted after Twitter filed the lawsuit, without explanation.
The arguments and evidence laid out by Twitter are “very strong and compelling” and likely to get a receptive ear in the Delaware court, which doesn’t look kindly on sophisticated buyers backing off of deals, said Brian Quinn, a law professor at Boston College.
“They make a very strong argument that this is just buyer’s remorse,” Quinn said. “You have to eat your mistakes in the Delaware Chancery Court. That’s going to work very favorably for Twitter.”
Musk alleged Friday that Twitter has failed to provide enough information about the number of fake accounts on its service. Twitter said last month that it was making available to Musk a fire hose” of raw data on hundreds of millions of daily tweets.
The company has said for years in regulatory filings that it believes about 5% of the accounts on the platform are fake. Musk is also alleging that Twitter broke the acquisition agreement when it fired two top managers and laid off a third of its talent-acquisition team.