“Musk apparently believes that – unlike any other party subject to Delaware contract law – he is free to change his mind, wipe out the company, disrupt its operations, destroy shareholder value and walk away,” the complaint said. The lawsuit sets in motion what promises to be one of the biggest legal battles in Wall Street history, involving one of the business world’s most colorful businessmen in a case that will trigger the language of irrevocable contracts. Sign up now for FREE unlimited access to Reuters.com Register On Friday, Musk said he was ending the deal because Twitter violated the agreement by failing to respond to requests for information about fake or spammy accounts on the platform, which is fundamental to its business performance. read more Musk, who is the chief executive 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 “harmed Twitter and its operations.” He said for the first time that layoffs are “on the rise” since the deal was announced. Twitter also accused Musk of “stealthly amassing” shares in the company between January and March without properly disclosing his significant purchases to regulators and said he “instead continued to amass Twitter shares with the market none the wiser.” Shares of the social media platform closed at $34.06 on Tuesday, up 4.3%, but well below the more than $50 levels where they were trading when the deal was approved by Twitter’s board in late April. The stock added another 1% after the bell. Musk said he was ending the merger because of a lack of information about spam accounts and inaccurate statements that he said amounted to a “material adverse event.” It also said the executive departures amounted to a failure in the ordinary course of business — though Twitter said it removed that language from the merger agreement during negotiations. Twitter also said it did not share more information with Musk about spam accounts because it feared it would create a competing platform after the acquisition was abandoned. Twitter called Musk’s reasons a “pretext” and said his decision to leave had more to do with the stock market’s decline, particularly in tech stocks. Tesla stock, the main source of Musk’s fortune, has lost about 30% of its value since the deal was announced and closed Tuesday at $699.21. In a separate filing, Twitter asked the court to schedule a four-day trial in mid-September. Legal experts said that from the information that is public, Twitter appears to have the upper hand. read more “In its complaint, Twitter takes the strong position that Musk had a case of buyer’s remorse — and that, not the bots, is the reason for his decision to back out of the deal,” said Brian Quinn, a professor at Boston College Law. School. “The facts presented by Twitter here make an extremely strong case for Twitter terminating this agreement.” Musk is among Twitter’s most-followed accounts, and the lawsuit included images of many of his tweets, including a bad-tempered emoji, which the company said violated the “non-disparagement” clause of the merger. Musk released the emoji on May 16 in response to a pair of tweets from Twitter CEO Parag Agrawal explaining the company’s efforts to combat spam accounts. It also included an image of a text message Musk sent to Agrawal after Twitter asked on June 28 for assurances about Musk’s funding of the deal. “Your lawyers are using these conversations to cause trouble,” Musk texted Agrawal. “This has to stop”. Twitter noted that after Musk said he was ending the deal, he sent tweets on Monday in which Twitter said his spam requests were part of a plan to force spam data into the public sphere. “To Musk, it appears that Twitter, the interests of its shareholders, the transaction to which Musk agreed, and the legal process to enforce it constitute an elaborate joke,” the lawsuit said. Sign up now for FREE unlimited access to Reuters.com Register Report by Tom Hals in Wilmington, Delaware. Editing by Chris Reese, Noeleen Walder and Matthew Lewis Our Standards: The Thomson Reuters Trust Principles.
