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Tipsheet

Twitter Sues Elon Musk

Photo by Evan Agostini/Invision/AP, File

As was to be expected, Twitter has sued Elon Musk for backing out of the deal to buy the social media platform. Musk had announced his intention to no longer pay $44 million for Twitter last Friday, claiming that Twitter had not met its contractual obligations, with specific concerns having to do with the undercounting of "bot" accounts and access to related data.

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CNBC reported that the lawsuit was filed in the Delaware Court of Chancery, and laid out what could be an "unpredictable" legal battle:

Twitter said Musk, after entering a binding merger agreement, now “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”

Twitter’s suit was expected after Musk said late last week that he no longer plans to buy the social network, citing Twitter bots and claiming that the company didn’t give him the information he needed to evaluate the deal. 

The lawsuit filed on Tuesday 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. 

The outcome of the dispute could be unpredictable, legal experts say, and could involve a judge forcing Musk to complete the deal, Musk paying a $1 billion breakup fee, or other scenarios including a settlement or Musk walking away without paying anything.

According to excerpts from the complaint, Twitter believes Musk backed out of the deal when he did because market changes, and also takes issue with his reasons given:

In the suit filed Tuesday, Twitter argued that Musk’s conduct during his pursuit of the social network was in “bad faith” and accused the Tesla CEO of acting against the deal since “the market started turning.” 

“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 wrote in the complaint. 

“This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business,” Twitter wrote in its suit.

The suit says that Musk’s claims about why he wants to terminate the deal, including the prevalence of bots on the service, are “pretexts.”

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While Twitter blames Musk for its decline in stock prices per share, CNBC mentions that "other social media companies have also seen their share prices slide during the same period."

While many conservatives lamented the news, others predicted Friday's announcement wasn't the end of it. Former President Donald Trump also weighed in during a rally last Saturday, calling Musk a "bulls*t artist," which led Musk to tweet his response out that Trump should "hang up his hat."

It's worth noting that Trump, in May, had weighed in on the deal, speculating that "There is no way Elon Musk is going to buy Twitter at such a ridiculous price, especially since realizing it is a company largely based on BOTS or Spam Accounts." He also referred to the price tag as "the ridiculous Billion Dollar breakup fee."

Musk also reiterated his support for Gov. Ron DeSantis (R-FL) for 2024, mentioning "too much drama" with Trump and a desired age limit. 

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Trump has indicated he will not come back to Twitter even if Musk were to buy the platform and allow him back on, as he prefers to stay on Truth Social, his own platform. 

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