Social media platform Twitter Inc TWTR filed suit Tuesday against Tesla Inc TSLA CEO Elon Musk in an effort to force the proposed $44-billion takeover of the social media platform that Musk withdrew from last week.
The lawsuit includes details of the merger agreement and how Musk’s Twitter use and memes could come up in court.
What Happened: Twitter has sued Musk in the Delaware Court of Chancery after he backed out of a proposed $44-billion offer to take Twitter private at $54.20 per share.
“In April, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done. Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interest,” the lawsuit reads.
Twitter is listed as the plaintiff and the defendants in the suit are Musk, X Holdings I and X Holdings II, the individual and holding companies that own 9.6% of Twitter and proposed the buyout.
“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.”
The lawsuit said Musk offered a take-it-or-leave-it basis offer for $54.20 per share on April 25. Along with the share price, Musk touted the deal being “seller friendly” with no financing contingency or diligence condition.
The narrative shifted later to verification of spam on the social media platform, the lawsuit said.
Musk terminated the merger agreement on July 8, claiming breach of information-sharing, materially inaccurate representations and failure to comply with terminating certain employees and slowing hiring.
"These claims are pretexts and lack any merit," Twitter said in the court document.
Musk tweeted yet again Tuesday evening after the lawsuit was filed:
Oh the irony lol
— Elon Musk (@elonmusk) July 12, 2022
Related Link: Exclusive: Musk's Material Adverse Effect Not An Option For Him Walking Away, Merger Expert Tells Benzinga
Twitter's Additional Claims: According to the lawsuit, Musk spoke with Jack Dorsey and Egon Durban about joining the Twitter board. Musk later spoke with Twitter CEO Parag Agrawal and laid out his plans to join the board, take the company private or start a competitor.
Musk texted Taylor on April 13, days after saying he would no longer join the board; the text said he planned to offer to buy 100% of Twitter for $54.20.
“My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,” Musk said, according to the lawsuit.
Musk's Twitter Use: Among the items highlighted in the lawsuit are tweets sent by Musk that involve subtle references, memes and emojis.
The lawsuit references “all-too-public reference to a hostile tender offer” in reference to a tweet with a blank space and then the words “is the night,” referencing "tender is the night," and a tweet with the words "love me tender."
Agrawal tweeted on May 16 that Twitter’s 5% spam estimate is based on “multiple human reviews.” The tweet from the Twitter CEO received a simple poop emoji in response from Musk, an item referenced in the lawsuit as “another disparaging tweet.”
Recent tweets from Musk that involve a game of chess with Chuck Norris and a meme of asking Twitter for information are also referenced in the lawsuit.
“Musk posted tweets implying that his data requests were never intended to make progress toward consummating the merger, but rather were part of a plan to force litigation in which Twitter’s information would be publicly disclosed.”
What’s Next: The filing by Twitter Tuesday after market close makes an anticipated legal dispute official.
“For Musk, it would seem, Twitter, the interest of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke,” the lawsuit reads.
The potential outcomes include the court siding with Twitter and the $44-billion buyout being enforced, Musk coming back with a lower buyout offer, the court awarding Twitter a merger termination fee or the court siding with Musk and the Tesla CEO walking away without penalty.
TWTR Price Action: Twitter shares are up 1% to $34.46 in after-hours trading Tuesday.
Photo via Shutterstock.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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