In the complaint filed on Tuesday, Twitter’s lawyers said they were seeking to prevent Musk from further breaches of the agreement, and “force the completion of the merger to meet the few remaining conditions.”
“In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to do everything in his power to complete the transaction,” the complaint states. “Now, less than three months later, Musk is refusing to honor his obligations to Twitter and its shareholders because the deal he signed is no longer in his personal interests.”
The deal is now likely heading into a lengthy court battle to determine whether Twitter can force Musk to close the deal and become its owner, or at least get him to pay the $1 billion stipulated in breakup fees in the original agreement.
After initially saying he wanted to buy Twitter to root out the bots, Musk in recent weeks has expressed concerns (without any clear evidence) that there are more bots on the platform than Twitter has publicly stated.
Twitter said in its complaint on Tuesday, “Having created a public scene for Twitter’s operation, and after proposing and then signing a seller-friendly merger agreement, Musk appears to believe that – unlike all other parties subject to the Delaware Contract Act – he is free to change his mind, and destroy the company, disrupting its operations, destroying shareholder value, and turning away.”
She later adds that Musk’s attempts to walk out of the deal and his “disregard for Twitter and its employees… are exposing Twitter to negative effects on its business operations, employees, and stock price.”
Indeed, Twitter stock, which reclaimed about 4% on Tuesday after a sharp drop on Monday, is trading 34% below its price on the day Twitter and Musk struck the deal, and 37% below Musk’s bid price, indicating doubts. Deep about closing the deal. At least at its original price. The sale price in the agreement, $54.20 per share outstanding, represents a 38% premium to the share price the day before Musk disclosed his stake in the company.
The document, for example, refers to Musk’s tweets in the days leading up to the agreement, in which he appeared to hint at launching a hostile takeover with a bid via his “Love Me Tender” and blank tweet followed by “Night.” He also referred to a tweet by Musk on Monday that included images of Musk laughing and suggesting that if Twitter sued him to enforce the deal, he would have to reveal the data on the bots he was requesting in court.
“To Musk, Twitter, its contributors’ interests, the deal Musk agreed to, and the court process to enforce it all appear to be a complicated joke,” the complaint reads.
In the filing, Twitter contested several of the ways Musk accused the company of violating the takeover agreement, including an allegation in his Friday letter that Twitter violated the deal by laying off two CEOs last month. Twitter alleges that Musk wanted the merger agreement to state that the company could not hire or fire employees at or above the vice president’s level, or “above a presumed violation of the normal course covenant” without Musk’s consent. The complaint states that “Twitter managed to hit this ruling before signing.”
In conjunction with the complaint, Twitter filed a request to speed up proceedings in the case, requesting a four-day trial over the dispute to be completed in September.
“The expedition is necessary to allow Twitter to secure the benefit of the transaction, to address Musk’s ongoing abuses, and to protect Twitter and its shareholders from the ongoing market risk and operational harm resulting from Musk’s bullying attempt to exit an airtight merger agreement,” the submissions.
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