A legal battle breaks out between Elon Musk and Twitter after the tycoon withdrew his offer to buy the company for $44 billion.
On Sunday, July 10, Musk responded with a meme, after Twitter reportedly hired lawyers to file a lawsuit against the tycoon. The entrepreneur tweeted a meme of him laughing in reaction to the alleged upcoming legal dispute.
“They said I couldn’t buy Twitter; Then they wouldn’t disclose bot info; Now they want to force me to buy Twitter in court; Now they have to disclose bot info in court,” Musk’s meme reads.
Musk remained absent from Twitter for several days, but reappeared after it became known that he withdrew the purchase of the social network because the company would not have provided the real information about the number of bots on the platform.
The Tesla CEO’s decision leaves the Twitter board in a very difficult position, because now the social network cannot accept a lower price per share, nor reach a new agreement because, basically, it risks being sued by its own shareholders.
Since June 6, Elon Musk has been considering withdrawing the offer to buy Twitter after accusing the social network of hiding key information about the company.
The tycoon gave an ultimatum in a letter to Twitter’s chief legal officer, in which his lawyers stated that not providing more details about bots and fake accounts is a “clear material breach” of the purchase agreement.
A story published by The Wall Street Journal revealed that Musk believes Twitter is frustrating his reporting rights and the company’s obligations under the merger agreement.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” it reads.
Twitter to sue Elon Musk
According to Bloomberg, Twitter has hired the law firm Wachtell, Lipton, Rosen & Katz LLP to represent it in an upcoming lawsuit against Musk.
Twitter’s lawyers cite that Musk would have violated clauses that maintained the pre-purchase agreement that both parties agreed to at the beginning of negotiations.
Twitter’s board said in a statement Friday that it was committed to closing the transaction at the agreed-upon price and terms, and would take legal action to enforce the agreement. “We are confident that we will prevail in Delaware Chancery Court,” the board said.
Meanwhile, a law firm representing Tesla’s CEO sent a letter to Twitter on Friday, alleging that the company “made false and misleading representations” when Musk agreed to buy the company on April 25 and “breached” multiple provisions of the initial agreement.
Musk’s team has expressed concern about “spam bots” on the platform, and Musk wants Twitter to prove that less than 5% of its daily active users are automated spam accounts. Musk has argued that Twitter significantly underestimated the number of these spam bots.
Twitter has claimed that spam accounts represent well below 5% of its active user base each quarter.
So far there is no exact figure; however, according to Parag Agrawal, CEO of the company, the number amounts to 5% of total accounts, but Musk claims it is more than 20%.