Twitter sued Elon Musk on Tuesday for breaching a $44 billion deal to buy the social media platform and asked a Delaware court to order the world’s richest man to complete the merger at $54.20 per Twitter share.
“Unlike all other parties subject to Delaware contract law — Musk believes he is free to change his mind, trash the company, disrupt its operations, destroy shareholder value, and walk away,” the lawsuit says.
The lawsuit, which promises to be one of the biggest legal showdowns in Wall Street history, turns on permanent contract language in a case involving one of the business world’s most colorful entrepreneurs.
Musk said on Friday that he was terminating the contract because Twitter had breached the contract by failing to respond to requests for information about fake or spam accounts on the platforms, which is fundamental to its business performance.
Musk, the chief executive officer of electric vehicle maker Tesla Inc., did not immediately respond to a request for comment.
The lawsuit accused Musk of “a long list” of violations of the merger agreement that “disrupted Twitter and its business.”
Shares of the social media platform fell to $34.06 on Tuesday, sharply below the $50 level it traded at in late April when Twitter’s board approved the deal.
Musk said he was closing the merger because of what he said was a “material adverse event” due to lack of information about spam accounts and inaccurate representations. He said executive departures were tantamount to failing to conduct business in the ordinary course because he was obligated to do it on Twitter.
Twitter said it had negotiated to remove language from the merger agreement that would make such firings a violation of the normal course requirement.
Calling the reasons cited by Musk a “reason” without merit, Twitter said his decision to step down had more to do with the decline in the stock market, particularly in tech stocks.
Tesla’s stock, the main source of Musk’s wealth, lost 30% of its value to close at $699.21 on Tuesday after the deal was announced.
Legal experts said public Twitter could have the upper hand because of the way Musk negotiated the deal, eschewing traditional pre-merger due diligence.
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