Ever since it came out that Elon Musk was pulling out of his storied, fancied Twitter acquisition, it was a matter of when the company would hit back. The same has happened now, as Twitter has taken SpaceX founder to court to compel him to buy the popular micro-blogging site for the proposed $44 billion, as committed.
The company has sued the Tesla and SpaceX executive in a Delaware court, saying that Musk refused to honor his obligations to Twitter and its stockholders because it no longer served his “personal interests.”
Twitter has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable to his contractual obligations.
— Bret Taylor (@btaylor) July 12, 2022
This was coming, given that Musk announced on Friday that he would no longer follow through with the proposed acquisition of Twitter. In fact, Bret Taylor, Twitter’s chair of the board had confirmed that they would pursue the matter in court and that they were committed to closing the transaction.
This could mean that the long-drawn saga of Musk and Twitter could continue for the foreseeable future. According to a court filing, Twitter is seeking a four-day trial in September. This could be an uphill battle for Musk, and the billionaire could end up either being an unwilling man to walk down the aisle or having to shell out the $1 billion termination fee.
Musk had defended his decision to pull out of the acquisition by blaming the presence of spam and fake accounts on Twitter’s platform, Twitter’s handling of them, and the failure of the company to provide information regarding the same. The world’s richest man has been a harsh critic of Twitter’s policy regarding bot accounts on its platform, and he has even made a lot of noise regarding the same in recent months.
At that time, analysts suspected that the Tesla exec was using bot accounts as a pretext to weasel his way out of the deal or acquire the company at a lower price – and Musk added fuel to the fire by saying that it was not out of the question. Now, however, they are of the opinion, that Musk is maintaining his stance to pull out of the deal.
Are bot accounts really the reason behind Musk’s decision to not complete the acquisition (one which he had proposed out of the blue this April)? Or does it have to do with the economic downturn and tough market conditions?
The same saw the tech market take a huge hit and stocks and valuations plummet. Tesla was one of the several companies whose stocks have fallen in recent months. Given that his share in the company is one of Musk’s main sources of income, it would not be a stretch to say that Tesla’s stock has some influence over the decision.
For its part, Twitter denied that it was “in material breach of multiple provisions” of the deal, called the attempted termination an “invalid and wrongful” one, and claimed it was Musk who had violated the agreement. It did not hold back in its lawsuit to compel the consummation of the merger upon “satisfaction of the few outstanding conditions.”
“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,” Twitter’s complaint read.