In its fight to force Elon Musk to honour his agreement to buy Twitter for $44bn, the social media company has armed itself with the billionaire’s own tweets.
Twitter’s fiery lawsuit depicts Musk as unserious about the deal and accuses the Tesla chief executive of repeatedly violating the merger contract governing the acquisition. His cavalier attitude and flagrant misconduct under the terms of the agreement have been self-evident over the past few months, the company claimed, pointing to his frequent jabs at Twitter and its leadership on the platform itself.
“For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke,” lawyers for Twitter wrote in court papers filed in the Delaware chancery court on Tuesday.
The punchy document, filed together with an application from Twitter for the trial to be expedited to September, sets the stage for a high-stakes legal stand-off between one of the world’s richest men and one of Silicon Valley’s most influential social media platforms.
The two parties could settle or negotiate a deal at a lower price than the $54.20 originally agreed. But legal experts argue that for now, Twitter has the edge.
“We already knew Musk’s claims were weak. Twitter’s complaint hammers that home,” said Ann Lipton, a corporate law professor at Tulane University.
The characterisation of the deal, she said, is that Musk “decided to buy Twitter on a lark, essentially that he bullied the board into taking this deal and now he’s treating it as a plaything and walking away because the market dropped . . . while hurting Twitter stockholders”.
In the days before negotiations began Musk had written on Twitter “love me tender”, an allusion to a hostile tender offer he could have pursued if the Twitter board had not engaged.
Musk had described the merger contract he had proposed as “seller-friendly”, and the final document — which contains virtually no escape hatches for Musk, Twitter has argued — was quickly finalised at Musk’s behest the night before Twitter’s board officially accepted the deal.
Musk’s primary reason for walking away from the deal, according to a letter his lawyers sent to Twitter last Friday, was that the company had failed to provide enough information so he could calculate how many accounts were bots or fake.
Twitter said in the filing that it had gone above and beyond in providing details to Musk’s team to help them understand how the company evaluated the veracity of its accounts — only ever holding back certain information to protect privacy of its users. Musk, however, showed “little interest” in truly understanding how the company came to estimate the number of spam accounts, it said.
“From the outset, defendants’ information requests were designed to try to tank the deal. Musk’s increasingly outlandish requests reflect not a genuine examination of Twitter’s processes but a litigation-driven campaign to try to create a record of non-cooperation on Twitter’s part,” it wrote.
In tweet from May 17, Musk wrote on Twitter “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher . . . this deal cannot move forward”. The company said it was one of several tweets he made that violated both his obligation not to disparage the company and to help close the deal.
The filing also contained fresh details from behind the scenes, revealing how tense and chaotic the relationship had become even as the parties needed to co-operate — for Twitter shareholders to get their cash and for Musk to get control of the media company.
Musk bombarded Twitter with data requests related to his purported concerns about fake accounts. But one time, when he was set to meet with Twitter chief executive Parag Agrawal and its finance head, Ned Segal, Musk bailed and asked the discussion between the sides to instead focus on “the pro forma financials for the debt”.
Twitter said it had been reassured that Musk had initially retained former Intel chief executive Bob Swan as his adviser on the transaction, only to learn via text message that Musk had dumped Swan in late June.
“Over the ensuing days, Twitter’s repeated requests for a contact in lieu of Swan generated no response. Outreach by Goldman Sachs and J.P. Morgan to Morgan Stanley likewise was met with silence,” the complaint said.
At one point when Twitter became concerned about the status of the $13bn in debt financing that had been pledged to the deal, Musk texted Agrawal and Segal writing, “Your lawyers are using these conversations to cause trouble. That needs to stop.”
Twitter argues that Musk breached his obligation to do everything he could to secure financing for the deal. Eric Talley, a law professor at Columbia, said: “There is a strong patina in the opinion saying . . . not only did [Musk] not attempt to [finalise the financing], he actively was working to kneecap the deal, to get the debt financiers to fall back.”
Musk did not respond to a request for comment. After the lawsuit was filed, he wrote on Twitter: “Oh the irony lol.”
Twitter wrote that it expects a shareholder vote to occur as early as mid-August. Rather than damages, it is asking the court to bind Musk to close the deal as it says the contract requires.
Musk’s irreverence had long been central to his persona, and he has mostly skated free when faced with various legal threats in the past. In this instance, Twitter hopes to impress on the court that the mogul had gone too far.
“[The complaint] was definitely designed to try to give a sense of just how from Twitter’s perspective, even for a Silicon Valley company, it was hard to deal with what they alleged to be this type of sophomoric behaviour,” Talley said.
Read the full article here