Elon Musk is filing his own countersuit against Twitter to try and get out of his $44billion deal to buy the social media behemoth.
Musk’s legal team wants the Delaware Court of Chancery grant them extra time and ability to put together a case regarding fake accounts and ‘bots’ on Twitter, according to the New York Post.
This comes after Twitter on Monday accused Musk of trying to ‘slow walk’ the company’s lawsuit to hold him to his takeover and urged a September trial to ensure deal financing remains in place, according to a court filing.
‘Millions of Twitter shares trade daily under a cloud of Musk-created doubt,’ the company wrote. ‘No public company of this size and scale has ever had to bear these uncertainties.’
It’s suggested that the longer this stays in the courts, the more it could hurt Twitter stock prices and the easier it would make it for Musk to get a friendlier buyout price.
Elon Musk is set fire back at Twitter’s lawsuit against him with a countersuit of his own in an attempt to put an end to his $44billion deal to by the social media behemoth
Parag Agrawal, CEO of Twitter, attends the annual Allen and Co. Sun Valley Media Conference in Sun Valley, Idaho
Delaware Court of Chancery Chancellor Kathaleen McCormick will hear both Twitter and Musk’s lawsuits
Twitter has sued Musk and asked a Delaware judge to order him to complete the merger at the agreed price of $54.20 per share.
The company said if Musk is ordered to close the deal it could still take months of additional litigation to close the debt financing, which expires in April. For that reason, Twitter asked the judge to reject Musk’s proposal to hold the trial in February.
Musk, who is the world’s richest person and chief executive of electric carmaker Telsa Inc, accused San Francisco-based Twitter of rushing the trial to obscure the truth about spam accounts and to “railroad” him into buying the company.
The first hearing in Twitter’s original lawsuit will take place Tuesday in front of Delaware Court of Chancery Chancellor Kathaleen McCormick.
McCormick will likely rule on Twitter’s request for an expedited trial. According to the Post, Twitter’s lawyers want the trial to start in September, while Musk’s team wants it to begin no earlier than February 2023.
Musk’s countersuit will also be heard by Chancellor McCormick.
On July 8, 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 platform, which is fundamental to its business performance.
The billionaire appeared to respond to the suit in a tweet on Tuesday evening, writing: ‘Oh the irony lol.’
He seemed to be referring to the fact that he was initially aggressive in pursuing the deal over skepticism from Twitter’s board, roles that have now reversed.
Twitter has sued Elon Musk for violating his $44 billion agreement to buy the social media platform
Twitter filed the lawsuit (above) on Tuesday in Delaware chancery court
Musk appeared to respond to the suit in a tweet on Tuesday evening
Twitter’s lawsuit argues: ‘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’s General Counsel Sean Edgett informed staff of the lawsuit in a company-wide memo on Tuesday afternoon.
‘We have also filed a motion for an expedited trial alongside the complaint, asking for the case to be heard in September, as it is critically important for this matter to be resolved quickly,’ Edgett wrote in the memo, according to the New York Times.
‘At this point we anticipate the next step in the process will be for the court to set a schedule for the case,’ he added.
The lawsuit was a widely anticipated step after Musk last week announced his intent to pull out of the April 25 merger agreement, which specified penalties for backing out of the deal.
Those penalties included a $1 billion breakup fee, as well as the ability for the parties to enforce the contract in court, which Twitter officials had previously vowed to do.
The lawsuit was a widely anticipated step after Musk announced his intent to pull out of the April 25 merger agreement (file photo)
Musk argues that Twitter has broken its contractual obligations by failing to disclose key information about fake accounts on the platform.
But it’s unclear whether the courts will be sympathetic to his argument. It the past, Delaware courts have forced prospective buyers to follow through on signed merger agreements, though the facts differ in each case.
For example, in 2020, Tiffany & Co sued Louis Vuitton maker LVHM when the luxury retailer attempted to back out of a deal to acquire the jewelry maker.
The litigation was settled out of court when LVHM agreed to complete the takeover of Tiffany at a slightly reduced price.
Twitter’s lawsuit will be heard in Delaware chancery court, as both Twitter and the company Musk is using to complete the merger are officially incorporated in Delaware.
Musk, who is the chief executive officer of electric vehicle 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.’