Topline
Twitter filed a lawsuit Tuesday against Elon Musk, asking a Delaware judge to order the billionaire to move forward with his agreement to buy the social media platform, a move that follows weeks of sniping between Twitter and the world’s richest man.
Tesla CEO Elon Musk is pictured at the start of production at Tesla’s “Gigafactory” in Germany on … [+]
Key Facts
The suit takes aim at Musk for trying to cancel his $44 billion deal to purchase Twitter last week, accusing the billionaire of backing out of the agreement because his personal wealth has fallen—not because he’s worried about the prevalence of fake accounts, as he has argued.
Twitter accused Musk of conducting a “fishing expedition” in an attempt to get out of the deal, requesting troves of sensitive data to back up Twitter’s public statements about the number of spam accounts, even though minor inaccuracies wouldn’t be grounds to terminate the deal unless they threatened a “material adverse event,” the company argued.
The company pushed back on Musk for claiming it hasn’t handed over enough information on spam accounts, arguing it tried to cooperate with Musk’s “increasingly invasive and unreasonable requests,” including by offering some information it wasn’t contractually required to give up.
Twitter also accused Musk of violating the deal’s non-disparagement section by publicly criticizing the company and encouraging the Securities and Exchange Commission to open an investigation into it.
Twitter’s attorneys are seeking “specific performance,” meaning they’d like Delaware’s Court of Chancery to force Musk to close the deal on the agreed-upon terms.
Forbes has reached out to Musk for comment.
Crucial Quote
Twitter’s legal complaint says Musk “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”
Contra
Musk has largely laughed off Twitter’s threats of legal action, tweeting out a meme on Monday claiming a lawsuit would force Twitter to disclose information about bot accounts in court. Twitter wasn’t so amused by the meme: “For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke,” the company wrote in its legal complaint.
Key Background
Tuesday’s lawsuit brings months of often-chaotic engagement between Musk and Twitter to a dramatic crescendo. Musk—a prolific Twitter user and frequent critic of the company’s moderation practices—bought 9.2% of Twitter shares earlier this year and accepted a seat on the company’s board, before later offering to buy the entire company for $54.20 per share. After some legal wrangling over the risk of a hostile takeover attempt, Twitter’s board accepted Musk’s offer in April, which he indicated he’d finance through a combination of cash, debt and outside investors. But less than three weeks later, the billionaire announced the deal was “temporarily on hold,” and asked Twitter to hand over evidence to support its long-running estimate that spam and fake accounts make up fewer than 5% of users. Twitter agreed to give Musk’s team access to data, but in a Friday regulatory filing, Musk claimed the company had not offered up enough details and tried to terminate the deal, suggesting Twitter had provided false or misleading information about the number of fake accounts on its social network. Twitter immediately vowed to take legal action against Musk, setting the stage for a high-profile court battle that could end with a pricey settlement — or the billionaire being ordered to purchase the company.
Big Number
$225.2 billion. That’s Musk’s net worth, according to Forbes’ estimates. While Musk—who serves as CEO of Tesla and SpaceX—is still the wealthiest person on Earth by a comfortable margin, his net worth has fallen in recent months, largely due to a sharp decline in Tesla’s share price.
Tangent
If Musk ends up buying Twitter, he has offered some clues about how he’d run the social network. Musk says he’d force some of the site’s most prolific users to pay a fee and loosen some of Twitter’s content moderation rules, including by lifting former President Donald Trump’s ban. He also vowed in April to “defeat the spam bots or die trying,” leading Twitter’s attorneys on Tuesday to call Musk’s attempts to exit the deal—which hinge partly on arguing Twitter has too many spam bots—a “model of hypocrisy.”
Source: https://www.forbes.com/sites/joewalsh/2022/07/12/twitter-sues-elon-musk-for-trying-to-cancel-acquisition-deal/