Twitter Sues Elon Musk
- Paul Thurrott
- Jul 12, 2022
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As expected, Twitter has sued Elon Musk for reneging on his deal to acquire the social media firm for $44 billion.
“In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done,” the lawsuit reads. “Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests. 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.”
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Twitter alleges that Musk engaged in a series of “material contractual breaches” and that it is suing to prevent further breaches. Musk, Twitter says, is legally obligated to consume the acquisition as agreed. Musk’s tactics show “disdain” for Twitter and its shareholders, the suit notes, adding that he has “repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price.”
Most interesting, perhaps, the suit addresses the three claims that Musk used as a justification for his attempt, last Friday, to terminate the acquisition.
“These claims are pretexts and lack any merit,” the suit notes. “Twitter has abided by its covenants, and no Company Material Adverse Effect has occurred or is reasonably likely to occur. Musk, by contrast, has been acting against this deal since the market started turning, and has breached the merger agreement repeatedly in the process.”
Twitter has asked the courts for an expedited trial in September so that its complaint can be heard and acted on quickly, and before the October 24 acquisition deadline.