Twitter Inc, in a complaint filed against Tesla CEO Elon Musk in the U.S.' Delaware Court of Chancery, states that for him, the Twitter buyout, shareholders' interests and legal obligations are nothing but an "elaborate joke". The mega $44-billion buyout deal collapsed last week after Musk accused Twitter of failing to provide information on bot accounts.
In a 62-page plea before the Delaware court, the microblogging platform says his requests for data on spam accounts were “never intended” to make progress toward consummating the merger but to force litigation to make information about the Twitter public.
The Twitter complaint says "Musk’s conduct simply confirms that he wants to escape the binding contract he freely signed, and to damage Twitter in the process".
Notably, after the billionaire announced he'll walk away from the deal, and Twitter threatened to sue him in a court of law, he laughed it off by sharing memes on Twitter. In one of the memes, he can be seen laughing in different postures, while saying "now they want to force me to buy Twitter in court". He also shared another tweet -- purportedly directed at Twitter -- of the U.S. actor Chuck Norris playing chess, and captioned it “Chuckmate”.
In a detailed complaint, the company says the entire dynamics changed -- as markets fell globally -- after he signed the $44 billion deal to acquire the company on April 25, 2022. The value of his own stake, as per a global business daily, in his company Tesla, the anchor of his personal wealth, also declined by over $100 billion from its November 2021 peak, says Twitter.
"So Musk wants out. Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter’s stockholders," it says, adding that ever since he signed the deal, Musk repeatedly disparaged Twitter and the deal, "creating business risk for Twitter and downward pressure on its share price".
Elon Musk, in his previous statements, has said information regarding spam accounts is crucial to Twitter’s business and financial performance and necessary to seal the deal. He has also challenged Twitter's methodologies of calculating the data on such fake accounts.
But Twitter thinks Musk’s exit strategy is a model of "hypocrisy". As per the company, Musk kept changing his stance and narrative since he signed the deal. "One of the chief reasons Musk cited on March 31, 2022, for wanting to buy Twitter was to rid it of the “[c]rypto spam” he viewed as a “major blight on the user experience,” Musk said he needed to take the company private because, according to him, purging spam would otherwise be commercially impractical. In his press release announcing the deal on April 25, 2022, Musk raised a clarion call to “defeat the spam bots.”
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, says the complaint. Twitter says Musk’s strategy is also a model of "bad faith". Musk has been working "furiously — albeit fruitlessly — to try to show that the company he promised to buy and not disparage has made "material misrepresentations" about its business to regulators and investors, it adds.
Musk's legal team this week had stated in an S.E.C. filing that sometimes Twitter has ignored his requests on bot accounts, sometimes it has rejected for unjustified reasons, and sometimes it has claimed to comply, giving him "incomplete or unusable information".
In its defence, Twitter's plea states it has abided by its binding agreement and that no company material adverse effect has occurred. Musk, it states, acted against the deal since the "market started turning", thus breaching the merger agreement.
"He has purported to put the deal on “hold” pending satisfaction of imaginary conditions, breached his financing efforts obligations in the process, violated his obligations to treat requests for consent reasonably and to provide information about financing status, violated his non-disparagement obligation, misused confidential information, and otherwise failed to employ required efforts to consummate the acquisition," states the complaint.
Twitter now wants the court to order the closure of the deal at the earliest. It says the Twitter stockholders are entitled to the benefit of Musk’s bargain and that Musk and his entities should be enjoined from further breaches. "Musk and entities should be ordered to comply with their obligations to work toward satisfying the few closing conditions, and ordered to close upon satisfaction of those conditions," says the complaint.
