Elon Musk has filed a countersuit against Twitter in an effort to back out of his $44 billion purchase agreement for the social media giant.
According to the New York Post, Musk’s legal team is asking the Delaware Court of Chancery for more time and the opportunity to build a case about phony accounts and “bots” on Twitter.
According to a court filing, Twitter on Monday accused Musk of attempting to “slow walk” the company’s case intended to make him accountable for his takeover and demanded a September trial to ensure transaction financing is maintained.
The business stated that “millions of Twitter shares trade every day under a cloud of Musk-created mistrust.
“There has never been a public corporation of this size and scope that had to deal with these uncertainties.
According to others, the longer this case is pending in court, the more damage it could do to Twitter stock prices and the simpler it would be for Musk to negotiate a more favorable takeover price.
Twitter has filed a lawsuit against Musk, requesting that a Delaware judge compel him to consummate the merger at the agreed-upon share price of $54.20.
The company warned that even if Musk is compelled to complete the transaction, the loan funding, which ends in April, would not be completed for months due to further litigation.
Twitter requested that the judge deny Musk’s request to have the trial in February.
Musk, the richest man in the world and the CEO of electric vehicle manufacturer Tesla Inc., said that San Francisco-based Twitter hurried the trial to hide the facts about spam accounts and “railroad” him into purchasing the business.
Tuesday, before Chancellor Kathaleen McCormick of the Delaware Court of Chancery, will be the first hearing in Twitter’s original complaint.
McCormick will probably make a decision regarding Twitter’s plea for a speedy trial.
The Post reports that Musk’s legal team wants the trial to begin no earlier than February 2023, while Twitter’s attorneys want it to begin in September.
Chancellor McCormick will also hear Musk’s countersuit.
On July 8, Musk announced that the agreement was being terminated because Twitter had broken the terms by refusing to provide information about phony or spam accounts that were critical to the platform’s ability to conduct business.
On Tuesday night, the billionaire appeared to address the lawsuit in a tweet, writing: “Oh the irony lol.”
He appeared to be making reference to the fact that he initially pursued the deal aggressively despite the board of Twitter being skeptical, roles that have since been reversed.
Twitter’s lawsuit states that 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.
‘Musk mounted a public spectacle to put Twitter in play and proposed and then signed a seller-friendly merger agreement, according to Twitter.
On Tuesday afternoon, General Counsel Sean Edgett of Twitter sent out a note to the whole company informing everyone about the complaint.
According to the New York Times, Edgett stated in the document that it was “critically vital” for the issue to be settled swiftly.
“We have also filed a motion for an expedited trial alongside the complaint, asking for the case to be heard in September,” he added.
At this point, he continued, “we anticipate the court will set a timeline for the case as the next stage in the procedure.”
The lawsuit was a much-anticipated action after Musk revealed last week that he intended to renege on the April 25 merger agreement, which included consequences for doing so.
These penalties included the option for the parties to enforce the contract in court, which Twitter administrators had previously promised to do, as well as a $1 billion breakup fee.
Musk claims that by withholding crucial information on phony accounts on the network, Twitter has violated its contractual commitments.
But it’s uncertain whether the courts will take his case seriously.
Although the circumstances in each instance vary, Delaware courts have previously ordered prospective bidders to adhere to merger agreements that they had signed.
For instance, Tiffany & Co. filed a lawsuit against LVHM in 2020 after the luxury retailer attempted to back out of a contract to buy the jewelry company. LVHM is the producer of Louis Vuitton.
When LVHM agreed to complete the acquisition of Tiffany at a slightly lower cost, the dispute was resolved out of court.
Since both Twitter and the business Musk is employing to effectuate the merger are legally incorporated in Delaware, the case filed by Twitter will be heard there.
Musk, the company’s CEO and creator of electric vehicles, did not immediately return a call for comment.
The complaint claimed that Musk has broken “a long number” of merger agreement provisions that “have put a shadow on Twitter and its business.”