News People Twitter sues Elon Musk over failed $65 billion merger

Twitter sues Elon Musk over failed $65 billion merger

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Twitter has sued Elon Musk for violating his $US44 billion ($65 billion) deal to buy the social media platform.

The social media company has asked a Delaware court to order the world’s richest person to complete the merger at the agreed rate of $US54.20 ($80.62) a share, according to a court filing.

“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 lawsuit said.

The move sets in motion what promises to be one of the biggest legal showdowns in Wall Street history, involving one of the business world’s most colourful entrepreneurs in a case that will turn on staid contract language.

Last Friday, Mr Musk said he was terminating the deal because Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platforms, which is fundamental to its business performance.

Twitter flagged the lawsuit on Tuesday (Australian time), after in a letter sent to Mr Musk and filed with US regulators in which it said it had not breached its obligations under the merger agreement.

Mr Musk, the chief executive of electric vehicle maker Tesla, had earlier laughed off the company’s threats to sue. He did not immediately respond to a request for comment – although there was a tweet on Wednesday morning.

“Oh, the irony, lol,” he wrote.

It accuses Mr Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business”.

Shares in the social media platform tumbled to $US34.06 on Tuesday from above $US50 when the deal was accepted by Twitter’s board in late April.

Mr Musk said he was terminating the merger because of the lack of information about spam accounts and inaccurate representations that he said amounted to a “material adverse event”.

He also said executive departures amounted to a failure to conduct business in the ordinary course, as Twitter was obligated to do.

Twitter said it negotiated to remove from the merger agreement language that would have made such firings a violation of ordinary course requirement.

The social media giant called the reasons cited by Mr Musk a “pretext” that lacked merit and said his decision to walk away had more to do with a decline in the stock market, particularly for tech stocks.

Tesla’s stock, the main source of Mr Musk’s fortune, has lost 30 per cent of its value since the deal was announced. It closed on Tuesday (US time) at $US699.21.

Legal experts have said that from the information that is public Twitter would appear to have the upper hand because of the way Mr Musk negotiated the deal, declining to do traditional pre-merger diligence.

-with AAP