'Model of hypocrisy': Twitter sues Musk for backing out of $44 bn deal

Twitter on Tuesday (July 12) said it has sued Elon Musk to force him to complete the $44 billion acquisition of the social media company. Twitter called Musk’s exit strategy as “a model of hypocrisy” and “a model of bad faith”.

Musk and Twitter have been bracing for a legal fight since the billionaire said Friday he was backing off of his April agreement to buy the company.

Also read: Explained: What happens next in the Musk-Twitter saga

The chair of Twitter’s board, Bret Taylor, tweeted Tuesday that the board has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable to his contractual obligations.

Twitter’s lawsuit opens with a sharply-worded accusation that Musk refuses to honour his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.

Reacting to the lawsuit, Musk tweeted, “Oh the irony lol.”

Oh the irony lol

— Elon Musk (@elonmusk) July 12, 2022

In the lawsuit, Twitter said, “Musk’s exit strategy is a model of hypocrisy. One of the chief reasons Musk cited on March 31, 2022 for wanting to buy Twitter was to rid it of the ‘[c]rypto spam’ he viewed as a ‘major blight on the user experience.’ Musk said he needed to take the company private because, according to him, purging spam would otherwise be commercially impractical.

“In his press release announcing the deal on April 25, 2022, Musk raised a clarion call to ‘defeat[] the spam bots.’ But when the market declined and the fixed-price deal became less attractive, Musk shifted his narrative, suddenly demanding ‘verification’ that spam was not a serious problem on Twitter’s platform, and claiming a burning need to conduct ‘diligence’ he had expressly forsworn.”

Further, it added, “Musk’s strategy is also a model of bad faith. While pretending to exercise the narrow right he has under the merger agreement to information for ‘consummation of the transaction,’ Musk has been working furiously — albeit fruitlessly — to try to show that the company he promised to buy and not disparage has made material misrepresentations about its business to regulators and investors.

“He has also asserted, falsely, that consummation of the merger depends on the results of his fishing expedition and his ability to secure debt financing.”

Also read: 48,000 per cent increase in demands to remove content from Twitter: Report

Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, 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 suit says.

Filing here: https://t.co/v3DytG4Cv1 https://t.co/mjbmm6tTMk

— Bret Taylor (@btaylor) July 12, 2022

The trial court in Delaware frequently handles business disputes among the many corporations, including Twitter, that are incorporated there.

Musk alleged Friday that Twitter has failed to provide enough information about the number of fake accounts on its service. Twitter said last month that it was making available to Musk a “firehose” of raw data on hundreds of millions of daily tweets.

The company has said for years in regulatory filings that it believes about 5% of the accounts on the platform are fake. Musk is also alleging that Twitter broke the acquisition agreement when it fired two top managers and laid off a third of its talent-acquisition team.

(With inputs from agencies)