NEW YORK, NEW YORK – MAY 02: Elon Musk attends the Met Gala 2022 In America: An Anthology of Fashion at the Metropolitan Museum of Art on May 2, 2022 in New York City. (Photo by Theo Vargo/WireImage)
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This is the latest twist in the months-long takeover saga since Musk. said last week that he wants to end the deal. Musk claimed that Twitter violated their agreement by not providing the information he requested to check the number of spam accounts on their platform and did not continue as usual by firing employees.
His attorney said they are also looking into whether a decline in Twitter’s stock price in the midst of a broader market downturn could affect the agreement.
After the letter from Musk’s lawyer went public, Twitter chairman Bret Taylor said the company plans to take responsibility. Tesla and the CEO of SpaceX to court. On Tuesday, the company followed through on that promise by filing a complaint with the Delaware Court of Chancery.
Shortly after filing the complaint, Musk tweeted“Oh irony lol.”
Here are some of the most high-profile accusations Twitter made against Musk in its complaint:
Musk’s public criticism of Twitter and the deal put his business at risk and “depressed his stock price,” the lawsuit says.
Twitter claims that Musk appears to be treating the company and the proposed deal as an “exquisite joke,” and the company points to Musk’s tweets highlighting the twists and turns of the merger saga.
It alleges that Musk continues to humiliate businesses, including publicly calling on the SEC to investigate spam disclosures.
According to Twitter, its executives offered Musk meetings to discuss spam accounts, but Musk did not show up.
Twitter claims that its CEO Parag Agrawal and CFO Ned Segal were trying to set up a time to talk to Musk and his team about spamming on the platform. Segal allegedly offered a mid-June time for discussion, but Musk said he was in conflict with the timing. Musk later agreed to the June 21 time, according to the complaint, “but then backed out and asked Agrawal and Segal to talk to his team not about the spam evaluation process, but about ‘preliminary debt financials’.”
Later in June, Twitter claims that Segal again offered time to discuss with Musk how Twitter selects accounts to determine spam prevalence, but “that meeting never took place despite Twitter’s many attempts.”
Musk initially said that Twitter’s privacy would help purge spam from the platform, which would otherwise be impractical, the company noted in its complaint. The document includes images of Musk’s tweets to show that he was well aware of spam Twitter accounts, such as one in April when he wrote: “If our Twitter bid succeeds, we will beat the spambots or die trying.” !”
Twitter claims that Musk only began demanding proof that spam was not a major problem for the platform when the market crashed.
Twitter also alleges that Musk is partially acting in bad faith, allegedly falsely claiming that closing the deal is “depending on the results of his fishing expedition and his ability to secure debt financing.”
Twitter claims that Musk willingly offered and agreed to terms that he advertised were “seller friendly.”
“There are no financial contingencies and no due diligence,” the company wrote in the complaint. “The deal is backed by strong debt and equity commitments. Musk personally contributed $33.5 billion.”
Musk’s lawyer said Twitter’s recent layoffs could be considered a breach of contract for deviating from business as usual.
But Twitter claims it has negotiated the right to hire and fire employees at its discretion without consulting Musk. Musk allegedly tried to stop Twitter from hiring or firing employees at the VP level or above, but the company said it successfully got rid of the provision before the agreement was signed.
Twitter reported that there were several closing conditions in the contract. The agreement required a majority vote of Twitter’s shareholders, regulatory approval, and no material adverse effects remaining at the time of the closure.
Twitter maintains that any inaccuracy in its financial statements to the Securities and Exchange Commission does not exempt it from closing unless it can be considered materially unfavorable. Twitter stated that this would not include situations affecting the market in general or other social media companies. It also alleges that Musk-controlled entities confirmed that they had conducted due diligence on the company to their satisfaction prior to the agreement.
Twitter points to clauses in the information sharing agreement that require Musk to be given “reasonable access” to the information. But the company emphasized that the information must be requested for “reasonable business purposes related to the consumption of transactions contemplated by this Agreement.”
Twitter also noted that it will be allowed to deny a request if it reasonably determines that compliance could harm competition if the deal is not closed or violates laws like those regarding privacy.
Twitter claims that Musk’s motivation to exit the deal is partly due to deteriorating market conditions since the deal was signed.
“Instead of bearing the costs of a market downturn, as required by the merger agreement, Musk wants to pass them on to Twitter’s shareholders,” the company said.
Twitter added that this behavior is consistent with Musk’s past actions, such as acquiring shares in the company. without proper regulatory notice.
“This is indicative of the dismissive attitude he showed towards a company that Musk, as its potential manager, should have been protecting,” Twitter wrote.
Musk did not immediately respond to a request for comment.