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Twitter sues Elon Musk over $44bn deal

·Finance Reporter, Yahoo Finance UK
·2-min read
Rege-Jean Page looks at Elon Musk as they arrive at the In America: An Anthology of Fashion themed Met Gala at the Metropolitan Museum of Art in New York City, New York, U.S., May 2, 2022. REUTERS/Andrew Kelly
Elon Musk claimed Twitter had not given information about the number of fake and spam accounts on the platform. Photo: Andrew Kelly/Reuters

Twitter (TWTR) has filed a lawsuit against Elon Musk after the billionaire said he was pulling out of a $44bn (£36.5bn) deal to take over the company.

The Tesla (TSLA) boss claimed Twitter had not given information about the number of fake and spam accounts on the platform.

Now Twitter has asked a Delaware court to order Musk to complete the merger at the agreed $54.20 per Twitter share.

"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," said the lawsuit.

The chair of Twitter's board, Bret Taylor, tweeted that the board has filed a lawsuit in the Delaware Court of Chancery "to hold Musk accountable to his contractual obligations".

Musk's core reason for walking away from the deal was his claim that Twitter did not provide enough information for him to understand the true state of the business – in particular its financial projections and how many users are bots, spammers, or otherwise inauthentic.

Twitter's filing rejects that allegation. The platform had insisted fewer than one in 20 of its monetizable daily active users is a bot or spam account, a figure Musk claimed he had trouble believing.

Musk's response to the lawsuits appears to be a meme of himself laughing at the prospect of facing Twitter in court.

“Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done,” according to the lawsuit. “Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”

Because the deal included a provision called a “specific performance clause”, the court could force Musk to buy the company as long as he has financing in place, which he claimed to have secured in May.

Musk's net worth has fallen by $65bn since he announced the Twitter takeover in April with Tesla stock losing about a quarter of its value during that time.

The two parties could settle or negotiate a deal at a lower price than the $54.20 originally agreed.

Watch: Twitter sues Elon Musk to hold him to $44bn deal