Elon Musk Responds to Twitter Lawsuit Over $44 Billion Deal

Elon Musk Responds to Twitter Lawsuit Over $44 Billion Deal
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Elon Musk on Friday accused Twitter of misleading him about his service, obscuring facts and failing to update him on senior management changes in his first formal reply the company’s lawsuit The goal was to force him to complete a $44 billion acquisition of the social media service.

Lawyers for Mr. Musk, who closed the blockbuster deal Twitter to buy in April but has since sought to exit the purchase, made the arguments in a legal filing aimed at opposing the company’s request for a four-day trial in September in the case.

Twitter is rushing to court after “a two-month treasure hunt fraught with delays, technical bottlenecks, evasive responses and ultimately rejections.” Musk’s attorneys said on the filing. They added that Twitter is trying to “obscure the truth.” fake accounts for the servicean issue that Mr. Musk has placed at the heart of his desire to get out of the deal.

Twitter had requested a trial in September because Mr. Musk had until October 14 to finalize his deal to buy the company. 24. Mr. Musk’s lawyers instead proposed a February hearing date, noting that the deadline for settlement would be automatically extended in the event of a lawsuit. The banks that have pledged to fund the deal have pledged that funding through April 25, 2023.

Mister. Musk’s lawsuit was a vigorous rebuke of Twitter’s allegations that he attempted to unfairly end the acquisition. In his lawsuit this week, Twitter said Mr Musk “knowingly, intentionally, willfully and materially breached his agreement to purchase the company” by falsely claiming he was not receiving information about the proliferation of fake accounts on the service.

The following litigation promises to be ugly and lengthened. Back-and-forth between the two sides had escalated for weeks before ending up in court. Mister. Musk has made harsh comments about the company, often questioning the proliferation of fake accounts on the platform. Fake accounts are used to spread spam or manipulate Twitter’s service by falsely boosting trends, and are often automated and not operated by real people.

At one point, Mr. Musk tweeted that the deal with Twitter was on hold. His actions coincided with a fall in tech stocks, including Tesla, the electric car maker that Mr. Musk runs and is the main source of his wealth.

Twitter has claimed that it is working with Mr. Musk to finalize the deal and intends to go through with the sale. In the deal agreement, Twitter and Mr. Musk have a so-called specific performance clause that allows the company to enforce the deal through lawsuits as long as the debt the billionaire has accumulated for the acquisition is in place.

A Twitter spokesman declined to comment.

Ann Lipton, a professor of corporate governance at Tulane Law School, said it’s clear why Twitter is evolving so quickly and Mr. Musk wasn’t.

“The Twitter board has a keen interest in getting this sorted out quickly, and they have a keen interest in delays – time is money,” she said. Von Mr Musk added: “He’s going to want to do as much discovery as possible and take as much time as possible, essentially hanging up the peril of the litigation itself and, over time, the uncertainty involved to force some sort of the.” agreement or withdrawal.”

In the legal filing, Mr. Musk’s lawyers repeated many of the arguments they made earlier this month when the billionaire said he intended to exit the deal.

Twitter did not enforce a rigorous count of fake accounts, preventing Mr. Musk’s efforts to understand how spam was counted, the filing said. “Musk was stunned to learn how tenuous Twitter’s process was,” the filing reads, noting that the company used humans rather than machine learning to figure out the information.

Mister. Musk tried to get more data from Twitter about fake accounts, the filing added, but the company “deliberately set up artificial roadblocks and frustrated the defendants’ efforts.”

It took Mr. Musk months of investigation and dozens of testimonies to determine how Twitter counted fake accounts, his attorneys said. Mister. Musk has claimed that Twitter’s public disclosures that fake accounts make up about 5 percent of active users are misleading. Wrong numbers could be a “material adverse impact” under the terms of the deal and Mr. Musk should walk away, his attorneys said, arguing that the numbers act “directly on Twitter’s likely value to users and advertisers.”

Twitter has Made mistakes with its user counts before, Mr. That’s what Musk’s lawyers said. In April, the company said it had overcounted its active users from 2019 to 2021.

The company said in its lawsuit that it knew Mr. Musk’s attorneys about the two executives and that the attorneys “raised no objection.”

Twitter and Mr. Musk is scheduled for a hearing on the case Tuesday at Chancery in Delaware, where the company filed its lawsuit against the billionaire. The court’s chancellor, Kathaleen St. J. McCormick, has been assigned to oversee the case and will decide whether to expedite the case, as requested by Twitter, or file it for Mr Musk.

If the lawsuit goes to court, Judge McCormick will decide whether Mr. Musk needs to complete the deal. You could Mr. Musk walked away and forced him to pay damages. By many readings of Twitter’s contract with Mr. Musk, damage would be limited to $1 billion. The two sides could also settle or renegotiate the deal.

Twitter has lost about a third of its value since Mr. Musk signed a deal to buy the company for $54.20 a share. The company is expected to announce its quarterly results next Friday.

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