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Angry bird: Twitter sues Elon Musk over failed buyout

Twitter has sued Elon Musk for violating the $US44 billion ($A65 billion) deal to buy the social media platform.

Jul 13, 2022, updated Jul 13, 2022
Twitter and Tesla CEO Elon Musk. (file image)

Twitter and Tesla CEO Elon Musk. (file image)

The company asked a Delaware court to order the world’s richest person to complete the merger at the agreed rate of $US54.20 ($A80.62) per share, according to a court filing.

“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 lawsuit said.

The move sets in motion what promises to be one of the biggest legal showdowns in Wall Street history, involving one of the business world’s most colourful entrepreneurs in a case that will turn on staid contract language.

On Friday, Musk said he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platforms, which is fundamental to its business performance.

Musk, the founder of electric car maker Tesla, did not immediately respond to a request for comment.

The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business”.

Shares in the social media platform tumbled to $US34.06 on Tuesday from above $US50 when the deal was accepted by Twitter’s board in late April.

Musk said he was terminating the merger because of the lack of information about spam accounts and inaccurate representations that he said amounted to a “material adverse event”.

He also said executive departures amounted to a failure to conduct business in the ordinary course, as Twitter was obligated to do.

Twitter said it negotiated to remove from the merger agreement language that would have made such firings a violation of ordinary course requirement.

The social media giant called the reasons cited by Musk a “pretext” that lacked merit and said his decision to walk away had more to do with a decline in the stock market, particularly for tech stocks.

Tesla’s stock, the main source of Musk’s fortune, has lost 30 per cent of its value since the deal was announced and closed on Tuesday at $US699.21.

Legal experts have said that from the information that is public Twitter would appear to have the upper hand because of the way Musk negotiated the deal, declining to do traditional pre-merger diligence.

 

-Reuters

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