SAN FRANCISCO — Twitter sued Elon Musk on Tuesday to force the billionaire to complete his $44 billion acquisition of the company, setting the stage for a protracted legal battle over the fate of the social media service.
the master. Musk in April agreed to buy Twitter but announced last week that he intended to walk away from the deal. to pay mr. Musk to abide by the takeover agreement, Twitter sued him in Chancery Court in Delaware. The court will determine whether he remains in limbo with the purchase or whether Twitter has breached its obligation to provide Mr. He grabbed the data he requested, authorizing him to walk away.
“Musk refuses to honor his obligations to Twitter and its shareholders because the transaction he signed is no longer in his personal interests,” the company said in the lawsuit. Musk appears to believe that – unlike any other party subject to Delaware contract law – he is free to change his mind, screw up the company, disrupt its operations, destroy shareholder value, and walk away.
At the heart of the issue is the subject of disclosure. To finish the deal, mr. Musk claimed that Twitter has refrained from handling information about spam bots, also known as fake accounts, on the platform. He has repeatedly said that he does not believe the company’s public statements that nearly 5 percent of its active users are bots. He said Twitter intentionally misled the public and obstructed its efforts to obtain more information about how the numbers were calculated. the master. Musk also took aim at Twitter for not warning it before firing two key CEOs recently.
but mr. Musk has signed a legally binding agreement with Twitter. In that contract, Twitter included a specific performance clause allowing it to sue to enforce the deal, as long as the debt the billionaire held for the takeover remained.
in a letter to mr. On Sunday, Musk’s lawyers said Twitter’s lawyers said his move to terminate the deal was “null and wrong” and that Mr. Musk “intentionally, intentionally, intentionally and materially violated” his agreement to buy the company. The company said it was confident in its numbers about spam accounts, and that it was using spam experts to check the count for accuracy.
In the lawsuit, Twitter argues that Mr. Musk, who also leads automaker Tesla, wanted out of the deal due to changes in the stock market affecting his fortune. (Tesla’s stock has fallen in recent months.) Twitter said the billionaire used his complaints about bots as an excuse to evade the agreement.
the master. The lawsuit said Musk also breached an agreement not to publicly insult Twitter executives, and “privately abandoned” his efforts to secure debt financing for the deal. By doing so, the social media company said he had breached his obligations to make “the best reasonable effort” to get a deal done.
Musk wanted to escape,” the company said. “But the merger agreement left him little room.”
the master. Musk did not immediately respond to a request for comment.
Sean Edgett, Twitter’s general counsel, notified employees of the lawsuit in an internal memo on Tuesday and said the company “has submitted a request for an expedited trial along with the complaint, requesting that the case be heard in September, as it is critical to the swift resolution of this matter.” The New York Times got the memo.
Twitter is seeking a four-day trial in September. A deadline for the deal has been set for October. 24 completed. If the transaction is still pending regulatory approval at that time, Mr. Musk and Twitter will have another six months to shut down.
Still, mr. Musk’s threat to withdraw could bring Twitter back to the negotiating table, allowing the billionaire to buy the company at a discount. The two sides can also settle. Or they could pay a $1 billion decommissioning fee and leave, an option that’s only allowed under certain circumstances, such as if it’s a master. Musk’s financing failed.
if mr. Musk has managed to separate himself from Twitter, it could be disastrous for the company. Its stock is down more than 35 percent from its offer of $54.20 per share. Twitter’s business has also deteriorated in recent months. In May, Twitter CEO Paraj Agrawal said in a note to employees that the company had not adhered to its business and financial goals.
Now that Twitter has filed a lawsuit, Mr. Musk and his lawyers are expected to respond. While the schedule after that depends on many factors, the company and mr. Musk will likely be called to a hearing in Delaware and undergo the discovery process, as both sides search for facts they believe are relevant to the case.
The case may then go to trial, although there is a chance that the judge assigned to the case will dismiss the master. Musk’s efforts to get away. If the lawsuit goes to trial, the judge will decide whether the Twitter disclosures were insufficient and materially damaging to the deal.
In the past, the Delaware Judicial Court has prevented companies from trying to walk away from deals. In 2001, for example, when Tyson Foods tried to back out of its takeover of the meatpacking company IBP, the court ruled that Tyson had to pursue the agreement. In cases where the court allowed buyers to move out, it required them to pay damages. By most readings of the Twitter contract with Mr. Musk, damages will be set at $1 billion.
Twitter and Mr. Musk has assembled legal teams to get rid of that. Twitter’s efforts in Delaware are led by William Savitt, attorney at Wachtell, Lipton, Rosen & Katz. Wachtell Lipton is known, among other things, for developing legal tactics to protect companies from hostile buyers, such as the poisoned pill that Twitter originally put in place to defend itself against Mr. musk.
the master. Savitt has experience before a Delaware court and has previously defended companies against the likes of Carl Icahn and Pershing Square, the investment firm run by billionaire William Ackman. but mr. Musk is unlike any other striker in the company that has preceded him, which makes him a particularly complex opponent.
the master. Musk’s legal team includes his personal attorney, Alex Spiro, as well as attorneys from Skadden, Arps, Slate, Major and Flom. Skadden is a corporate law firm, with extensive experience debating cases in a Delaware court, including the bid by luxury giant LVMH Moët Hennessy Louis Vuitton to break its $16 billion deal to acquire Tiffany & Company. Skadden’s client, LVMH, eventually shaved off about $420 million from the purchase price.
This is an evolving story. Check again for updates.
Mike Isaac Contribute to the preparation of reports.