The billionaire said on Friday that he was canceling his April deal to purchase the dominant social media company Twitter.
According to a court document, Twitter Inc. has filed a lawsuit against Elon Musk for breaking the terms of the $44 billion deal to buy the social media platform and urged a Delaware court to order the world’s richest man to complete the merger at the agreed-upon $54.20 per Twitter share.
On Tuesday, the lawsuit claimed that Musk “appears to believe that, in contrast to every other party subject to Delaware contract law, he is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
Musk announced the termination of the agreement on Friday, claiming that Twitter had broken the terms by refusing to provide information on phony or spam accounts on the platforms, which is essential to the operation of its business.
A request for comment from Musk did not immediately receive a response.
The lawsuit said that Musk has broken “a long number” of merger agreement provisions, which “have put a shadow over Twitter and its business.”
After the acquisition was approved by the board of directors of Twitter in late April, shares of the social media site dropped to $34.06 on Tuesday from over $50.
‘Violation of Acquisition agreement’
The corporation has stated in regulatory filings for years that it thinks approximately 5% of the platform accounts are phony. Twitter sacked two of its top managers and laid off a third of its talent acquisition team, according to Musk, who also claims that this violated the acquisition agreement.
According to Twitter, it negotiated to have language in the merger agreement that would have considered such firings to be outside of the norm removed.
The company’s board is “committed to finalizing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” according to Twitter Chairman Brett Taylor.
The agreement stipulates a $1 billion breakup fee in the event that Musk fails to carry out the sale as planned.
Twitter may suffer as a result of the legal spat, according to Daniel Ives, an analyst at the Wedbush investment firm. He wrote in a note to clients that “the company will battle Musk in an elongated court battle to reclaim the transaction and/or the breakup fee of $1 billion at a minimum.”
Musk has criticized Twitter officials including CEO Parag Agrawal on the platform, where he has more than 100 million followers, and he has questioned Twitter’s assertions about the number of spam accounts. Musk sent a poop emoji in response to a tweet from Agrawal regarding measures Twitter has taken to combat fraudulent accounts.
‘Words over War’
These tweets have now been turned into ammo for Twitter, which wants to show that Musk was irresponsible and cavalier about the deal and the impact his words could have on the company he wanted to acquire.
“For Musk, it would seem that Twitter, the interests of its investors, the transaction Musk consented to, and the legal process to enforce it all comprise an elaborate joke,” Twitter writes in the complaint against Musk.
