WILMINGTON, Del., July 12 (Reuters) – Twitter Inc (TWTR.N) He sued Elon Musk on Tuesday for breaching his $44 billion deal to buy the social media platform and asked a Delaware court to order him to join the world’s richest man for an agreed-upon $54.20 per Twitter share.
“Musk believes he is free to change his mind, trash the company, disrupt its operations, destroy shareholder value and walk away — unlike other parties bound by Delaware contract law,” the complaint said.
The case promises to be one of the biggest legal battles in Wall Street history, involving one of the business world’s most colorful entrepreneurs, which will drive standard contract language.
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On Friday, Musk said he was terminating the contract because Twitter breached the contract by failing to respond to requests for information related to fake or spam accounts on the site, which are fundamental to its business performance. read more
Musk, CEO of electric vehicle maker Tesla Inc, did not immediately respond to a request for comment.
The lawsuit accuses Musk of a “long list” of violations of the merger agreement that “have caused havoc for Twitter and its business.” It said for the first time that layoffs were “on the rise” since the deal was announced.
Twitter accused Twitter of “secretly” accumulating shares in the company between January and March without properly disclosing its substantial purchases to regulators.
Shares of the social media platform rose 4.3% to $34.06 on Tuesday, but were below levels above $50 at which they traded when the deal was approved by Twitter’s board in late April. The stock added another 1% after the bell.
Musk said he was shutting down the link because of what he said was an “economic adverse event” due to a lack of information about spam accounts and misrepresentations. He said the executive departures were a failure to conduct business in the ordinary course — and Twitter said it removed that language from the merger agreement during negotiations.
Twitter said it did not share more information with Musk about the spam accounts because it feared he would create a competing platform after abandoning the acquisition.
Twitter called the reasons cited by Musk “excuses” that lacked merit and said his decision to step away was related to a slump in the stock market, particularly tech stocks.
Shares of Tesla, the main source of Musk’s wealth, have lost about 30% of their value since the deal was announced and closed at $699.21 on Tuesday.
In a separate filing, Twitter asked the court to schedule a four-day hearing in mid-September.
In a memo to Twitter employees on Tuesday, Twitter Chief Executive Barak Agarwal sought to reassure employees about the future.
“We will prove our position in court and we believe we will win,” he wrote in the memo, which was seen by Reuters.
Legal experts have said that Twitter will have the upper hand based on the information available on public Twitter. read more
“Twitter has taken a strong position in its complaint that Musk suffered buyer’s remorse — that was the reason for his decision to pull out of the deal, not the bots,” said Brian Quinn, a Boston College law professor at the school. “The facts that Twitter presents here make a very strong case for Twitter closing the deal presents.”
Musk is one of Twitter’s most followed accounts, and the lawsuit includes images of several of his tweets, including a poop emoji, which the company said violated the link’s “non-disparagement” rule.
Musk tweeted the emoji on May 16 in response to a pair of tweets from Agarwal, explaining the company’s efforts to combat spam accounts.
It includes an image of a text message Musk sent to Agarwal on June 28 after Twitter promised Musk would finance the deal.
“Your lawyers are using these conversations to cause trouble,” Musk texted Agarwal. “It has to stop.”
After Musk said it was terminating the deal, Twitter said it sent tweets on Monday that suggested his claims about spam were part of a plan to force spam data into the public domain.
“To Musk, the interests of Twitter, its shareholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate farce,” the lawsuit said.
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Reporting by Tom Halls in Wilmington, Delaware; Editing: Chris Rees, Nolene Walter and Matthew Lewis
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