A lawsuit filed in Delaware Chancery Court on Tuesday by Twitter Inc. said Elon Musk has no legal basis for axing the $44 billion deal to purchase the microblogging and social media platform. The complaint accuses Musk of backing out of the April-announced deal for illegitimate reasons, namely a decline in his personal finances due to Tesla tanking more than $100 billion in value since its November 2021 apex.
Twitter called his exit strategy a model of “hypocrisy” and “bad faith.”
The 62-page lawsuit recounted the timeline and details of the deal Musk now wants to walk back. It said that after agreeing to purchase the company for $54.20 per share, a price representing a nearly 40% premium over Twitter’s unaffected share price, Musk committed a number of wrongful acts against the company.
Allegedly, and hoping to purchase Twitter more cheaply, Musk repeatedly disparaged Twitter and the buyout, creating business risk and downward pressure on the company’s share price. Musk publicly opined that the company was not forthright about the number of bot accounts in existence and criticized the abrupt termination of two high-level employees.
Notably, at least one other Twitter shareholder has complained about Musk’s supposed market manipulation.
The complaint said that Musk provided several pretextual and meritless reasons for reneging the deal in his July 8 notice to Twitter. Supposedly, Twitter included inaccurate representations in the merger agreement Musk said are likely to result in an adverse effect on the company and failed to comply with normal procedures before terminating certain employees.
By contrast, Twitter countered that Musk “has been acting against this deal since the market started turning, and has breached the merger agreement repeatedly in the process.” It accused him of regarding himself as above the law in order to avoid bearing the cost of the market downturn, as the merger terms require, and instead attempting to shift the burden to Twitter’s stockholders.
The complaint asks the Delaware court to enjoin Musk from further breaches and to compel him to seal the deal.
Twitter is represented by Potter Anderson & Corroon LLP and of counsel Wachtell, Lipton, Rosen & Katz and Wilson Sonsini Goodrich & Rosati P.C.
