‘A Model of Hypocrisy’: Twitter Sues Elon Musk for Trying to Terminate Deal
Twitter has accused Musk of wanting to terminate the deal because of the major downturn in the stock market
The suit, which was obtained and shared by NPR, was filed in Delaware’s Court of Chancery Tuesday, July 12. It accuses Musk of reneging on the contract he signed to buy Twitter because it “no longer serves his personal interests,” adding, “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’s goal, the suit states, is to “enjoin Musk from further breaches, to compel Musk to fulfill his legal obligations, and to compel consummation of the merger upon satisfaction of the few outstanding conditions.”
Lawyers for Musk did not immediately return Rolling Stone’s request for comment — nor had Musk himself tweeted about the lawsuit at the time of publication.
The widely expected lawsuit arrived just days after Musk announced he was backing out of the Twitter deal. In a July 8 letter to Twitter’s chief legal officer, Musk’s team said he was “terminating” the agreement due to a “material breach” of the deal and “false and misleading representations” Twitter made prior to the agreement. Those breaches, in Musk’s view, involve the proliferation of spam bots on the platform, with Musk accusing Twitter of withholding the data and information he deems necessary to evaluate just how prevalent spam accounts are on Twitter.
Twitter, for its part, has publicly estimated five percent of daily users who see ads are bots or spam accounts, though it admits it could be higher. Musk has claimed that number could be as high as 20 percent, but even if it was, it’s possible that such a disparity in data would not be enough to let Musk pull out of the deal without penalty.
In the suit, Twitter accused Musk of wanting to terminate the deal because of the major downturn in the stock market, which has hit tech companies — like Twitter and Musk’s Tesla — especially hard. The deal struck in late April obligated Musk to buy Twitter at $54.20 a share (for a total of $44 billion); Twitter’s stock price has since fallen and currently sits at about $34.06 as of publication.
Amidst this downturn, Twitter’s suit claims, Musk has “repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price.” It goes on to call Musk’s fake accounts-based strategy “a model of hypocrisy,” noting his previous comments about wanting to buy Twitter and take it private to actually get rid of fake accounts.
“But when the market declined, and the fixed-price deal became less attractive, Musk shifted his narrative, suddenly demanding ‘verification’ that spam was not a serious problem on Twitter’s platform and claiming a burning need to conduct ‘diligence’ he had expressly forsworn,” the suit reads.
Twitter also rebuffed the accusation Musk leveled in the letter terminating the agreement, saying his claims “are pretexts and lack any merit.” It states that Twitter has “abided by its covenants,” while Musk “has been acting against this deal since the market started turning, and has breached the merger agreement repeatedly in the process.”
Twitter, as The New York Times notes, is aiming to get its case heard during a four-day trial in September. While the deal technically has to be completed by Oct. 24, a six-month extension could be allowed if the two parties are still waiting for regulatory approval.