WILMINGTON, Del., July 12 (Reuters) – Twitter Inc. (TWTR.N) on Tuesday sued Elon Musk for violating its $ 44 billion deal to buy the social media platform and sued a Delaware court ordering the world’s richest person to complete the merger at the $ 54.20 agreed upon by Twitter.
“Apparently, Musk believes that he, unlike all other parties subject to Delaware contract law, is free to change his mind, dirty the company, disrupt its operations, destroy shareholder value, and leave.” , said the complaint.
The lawsuit sets in motion what promises to be one of the biggest legal clashes in Wall Street history, involving one of the most showy business people in the business world in a case that will activate a stable contractual language.
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On Friday, Musk said he was ending the deal because Twitter violated the deal by failing to respond to requests for information about fake or spam accounts on the platform, which is critical to its business performance. Read more
Musk, who is the CEO of electric vehicle maker Tesla Inc., did not immediately respond to a request for comment.
The lawsuit accused Musk of “a long list” of breaches of the merger agreement that “have wrapped up Twitter and its business.” He said for the first time that employee wear and tear has been “on the rise” since the deal was announced.
Twitter also accused Musk of “secretly” accumulating shares of the company between January and March without properly disclosing its major purchases to regulators, and said it “continued to accumulate Twitter shares with the market without further wisdom.”
Shares of the social media platform closed at $ 34.06 on Tuesday, up 4.3%, but well below the levels above $ 50 where they were trading when the deal was accepted by the Twitter board in late of April. Shares added another 1% after the bell.
Musk said he was ending the merger due to a lack of information about spam accounts and inaccurate representations that he said was a “material adverse event.” He also said the executive’s departures meant a failure to do business in the regular course, although Twitter said it removed that language from the merger agreement during the negotiations.
Twitter also said it did not share more information with Musk about spam accounts because it feared it would build a competitive platform after abandoning the acquisition.
Twitter described the reasons Musk mentioned as a “pretext” that had no merit and said his decision to leave had more to do with a stock market crash, especially for tech stocks.
Shares of Tesla, Musk’s main source of wealth, have lost about 30% of their value since the deal was announced and closed at $ 699.21 on Tuesday.
In a separate document, Twitter asked the court to schedule a four-day trial in mid-September.
In a note to Twitter staff on Tuesday, Twitter chief executive Parag Agrawal tried to reassure employees about the future.
“We will test our position in court and believe we will prevail,” he wrote in the note, which was seen by Reuters.
Legal experts have said that from the information that is public Twitter would seem to have the advantage. Read more
“In its complaint, Twitter is taking a firm stand that Musk had a case of buyer remorse, and that, and not the robots, is the reason for his decision to move away from the deal,” he said. say Brian Quinn, professor at Boston University. School. “The facts that Twitter presents here constitute an extremely strong argument in favor of Twitter closing that deal.”
Musk is one of Twitter’s most followed accounts and the lawsuit included images from several of his tweets, including a poop emoji, which the company said violated the merger’s “no contempt” clause.
Musk tweeted the emoji on May 16 in response to a couple of Agrawal tweets, explaining the company’s efforts to fight spam accounts.
It also included an image of a text message Musk sent to Agrawal after Twitter sought reassurance on June 28 about Musk’s funding for the deal.
“Your lawyers are using these conversations to cause trouble,” Musk sent to Agrawal. “This has to stop.”
Twitter noted that after Musk said it was terminating the deal, it tweeted Monday that Twitter suggested its spam requests were part of a plan to force spam data into the public sphere.
“It seems that, for Musk, Twitter, the interests of its shareholders, the transaction that Musk accepted and the legal process to enforce it all constitute an elaborate joke,” the lawsuit said.
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Report by Tom Hals in Wilmington, Delaware; Editing by Chris Reese, Noeleen Walder and Matthew Lewis
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