Twitter Sues Musk For Trying To Cancel Merger

Twitter on Tuesday sued Tesla CEO Elon Musk for allegedly refusing to follow through with an agreement to acquire the social media platform for $44 billion.

“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,” Twitter alleges in a complaint filed Tuesday in Delaware Chancery Court.

The company is seeking to compel Musk to complete the acquisition.

In April, Twitter accepted Musk's offer to purchase the social media platform for $44 billion, or $54.20 per share. But not long afterward, Musk said he may not go through with the purchase due to spam accounts on the service. He claimed that as many as 20% of Twitter accounts are either bots or operated by spammers.

Twitter has said in Securities and Exchange Commission filings, including the 2021 annual report, that phony accounts represent fewer than 5% of “monetizable daily active usage.”

Last month, Twitter agreed to provide Musk with raw data about its users, in an attempt to address his concerns about phony accounts.

The company notes in its complaint that the market fell after the merger agreement was signed, adding that, according to a Wall Street Journal report, the value of Musk's stake in Tesla dropped by more than $100 billion since November.

"Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter’s stockholders," the company alleges. 

Twitter also alleges that Musk "has been acting against this deal since the market started turning, and has breached the merger agreement repeatedly in the process."

Among other alleged breaches of the contract, Musk "violated his obligations to treat requests for consent reasonably and to provide information about financing status, violated his non-disparagement obligation, misused confidential information, and otherwise failed to employ required efforts to consummate the acquisition," Twitter says in the complaint.

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