By John Ikani
Twitter Inc has sued Elon Musk for violating the $44bn deal to buy the social media platform and asked a Delaware court to order the world’s richest person to complete the merger at the agreed $54.20 per Twitter share.
On Friday, 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 platforms, which is fundamental to its business performance.
The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business”.
“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,” the firm said.
Shares in the social media platform tumbled to $34.06 on Tuesday from above $50 when the deal was accepted by Twitter’s board in late April.
The lawsuit marks the beginning of what could be a protracted legal battle as Twitter seeks to hold Musk to his deal to pay $54.20 per share for the company, and as Musk seeks to be let out of the agreement because of issues with spam bots or deal procedure.
Twitter said that Musk’s conduct during his pursuit of the social network was “bad faith” and accuses the Tesla CEO of acting against the deal since “the market started turning.”
The terms of the deal include a $1bn break-up fee if Musk does not complete the transaction as agreed.
Musk currently owns 73,486,938 shares of Twitter, which represents a 9.2 per cent stake in the company, according to the US Securities and Exchange Commission (SEC)13G filing.
On April 14, Musk said he had offered to buy 100 per cent of Twitter for $54.20 per share in cash.
Upon completion of Twitter’s sale, the company would have become privately held.
It was to be the biggest social media acquisition, surpassing the $26.2 billion buyouts of Linkedin by Microsoft.
On May 5, Musk announced he has secured $7 billion in new funding to fund the Twitter takeover.
On May 13, Musk, however, announced he has halted his $44 billion Twitter takeover. Mr Musk said he needed to resolve concerns over the number of fake or spam accounts on the platform.
