NEW YORK, NEW YORK – MAY 2: Elon Musk attends the 2022 Met Gala celebrating “In America: An Anthology of Fashion” at the Metropolitan Museum of Art on May 2, 2022 in New York City. (Photo by Theo Wargo / WireImage)
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Twitter has filed a lawsuit against Elon Musk for trying to keep the billionaire in his $ 44 billion deal to buy the company.
It’s the latest twist in the acquisition saga months after Musk said last week he wants to terminate the deal. Musk claimed that Twitter violated its agreement by not providing the information it requested to verify the number of spam accounts on its platform and did not continue with the normal course of business by making layoffs.
His lawyer said they were also considering whether declining returns on Twitter shares amid a broader market crash could affect the deal.
After Musk’s attorney’s letter was made public, Twitter board chairman Bret Taylor said the company planned to take the Tesla and SpaceX CEO to court. The company fulfilled that promise Tuesday with its complaint to the Delaware Chancellery Court.
Shortly after the complaint was filed, Musk tweeted, “Oh, the irony jejejejejejeje.”
Here are some of the most important accusations that Twitter made against Musk in his complaint:
Musk’s own words have helped bring down the stock price
Musk’s public criticism on Twitter and the deal have created a risk to his business and “downward pressure on the price of his shares,” the lawsuit says.
Twitter alleges that Musk appears to see the company and the proposed deal as an “elaborate joke” and the company notes that Musk’s tweets shed light on the twists and turns of the merger saga.
He claims Musk has continued to despise the business, even making a public call for the SEC to investigate his spam disclosures.
Musk allegedly was unable to hold any meetings with Twitter about spam
According to Twitter, his executives offered meetings with Musk to talk about spam accounts, but Musk did not attend.
Twitter alleges that its CEO, Parag Agrawal, and CFO Ned Segal had been trying to coordinate time to talk to Musk and his team about the prevalence of spam on the platform. Segal allegedly proposed a time to discuss in mid-June, but Musk said he had a conflict with the time. Musk later agreed to a deadline on June 21, according to the complaint, “but then bowed out and asked Agrawal and Segal to talk to their team not about the spam estimation process but about finances. pro forma of the debt “.
Later in June, Twitter alleges that Segal again offered time to review with Musk how Twitter shows accounts to determine the prevalence of spam, but “This meeting never occurred despite Twitter’s multiple attempts.”
“Musk’s exit strategy is a model of hypocrisy” and “bad faith”
Musk initially said Twitter deprivation would help remove spam from the platform in a way that would otherwise be impractical, the company noted in its complaint. The presentation includes images from Musk’s tweets to show that he was well acquainted with spam accounts on Twitter, such as one in April when he wrote: “If our Twitter offer is successful, we will defeat the spam bots or die in ho! “
Twitter claims that Musk only began demanding evidence that spam was not a serious problem on the platform once the market slowed.
Twitter also claims that Musk is acting in bad faith, in part, falsely claiming that closing the deal “depends on the results of his fishing expedition and his ability to secure debt financing.”
Musk allegedly accepted the terms “friendly to the seller.”
Twitter claims that Musk offered and gladly accepted terms that were “as he announced,” friendly to the seller. “
“There is no funding contingency or due diligence condition,” the company wrote in the complaint. “The deal is backed by net debt and capital commitments. Musk has personally pledged $ 33.5 billion.”
Musk’s attorney said Twitter’s recent layoffs could be considered a breach of contract to deviate from the normal course of business.
But Twitter claims it had negotiated the right to hire and fire employees as it saw fit without Musk’s consultation. Musk had tried to prevent Twitter from hiring or firing employees at the vice president or higher level, but the company said it successfully got rid of that provision before the deal was signed.
Twitter said there were few conditions for closing the contract. The deal required a majority vote of Twitter shareholders, regulatory approvals and no material adverse effects to continue at the time of closing.
Twitter claims that any inaccuracies in its financial reports to the Securities and Exchange Commission do not excuse the closure unless it can be considered materially adverse. Twitter said it would not include situations that affect the market broadly or other social media companies. It also states that the entities controlled by Musk claimed that they had conducted a review of the company to their satisfaction prior to the agreement.
Twitter claims it was not required to deliver information unrelated to the completion of the merger
Twitter points to the agreement’s information-sharing provisions that require it to provide “reasonable access” to the information to Musk. But the company has stressed that the information must be requested for a “reasonable business purpose related to the completion of the transactions covered by this Agreement.”
Twitter also noted that a request would be allowed to be rejected if it reasonably determined that compliance could cause it competitive harm if the agreement was not closed or would violate laws such as privacy laws.
Musk supposedly doesn’t want to withstand a market crash
Twitter alleges that Musk’s motivation for trying to get out of the deal stems in part from deteriorating market conditions since he signed the deal.
“Instead of assuming the cost of the market crash, as required by the merger agreement, Musk wants to pass it on to Twitter shareholders,” the company says.
Twitter added that this behavior is consistent with Musk’s past actions, such as acquiring shares of the company without proper regulatory notice.
“It tracks the contempt it has shown towards the company that would have been expected to protect Musk, as an aspiring administrator,” he wrote on Twitter.
Musk did not immediately respond to a request for comment.
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LOOK: A chronology of the acquisition saga of Elon Musk and Twitter