Elon Musk opposes Twitter’s lawsuit over $44 billion deal

Elon Musk On Friday accused Twitter of misleading him about its service, obfuscating facts and failing to notify him of operating changes, in his first official response to corporate lawsuit to force him to complete a $44 billion acquisition of the social media service.

Attorney for Mr. Musk, who hit a blockbuster deal to buy Twitter in April but later attempted to end the purchase, citing arguments in a legal filing against 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 with delays, technical bottlenecks, evasive answers and ultimately denials,” Musk’s attorney said in a statement. file. They added that Twitter is trying to “cover up the truth” fake account on servicean issue that Mr. Musk has cited as central to his desire to withdraw from the deal.

Twitter has requested a trial in September because Mr. Musk will finalize the deal to buy the company by October 24. Musk’s lawyers have proposed a trial in February, noting that the deal’s deadline automatically extended in the event of litigation. . Banks that have pledged to support the financing of this arrangement have promised that funding will be available through April 25, 2023.

Mr. Musk’s legal filing is a strong rebuttal to Twitter’s accusations that he was trying to close the deal gratuitously. In this week’s lawsuit, Twitter said Mr Musk had “willfully, knowingly, knowingly and seriously violated” the company’s acquisition agreement by falsely claiming that he was not informed of the popularity of the company. fake accounts on the service.

Next Legal battle promises to be bad and lasting. The back and forth between the two sides escalated for weeks before going to court. Musk has made scathing comments about the company and frequently questioned the prevalence of fake accounts on the platform. Fake accounts are used to spread spam or manipulate Twitter’s service by falsely promoting trends and are often automated rather than run by real people.

At one point, Mr. Musk tweeted that the deal with Twitter was on hold. His actions coincided with a decline in the value of technology stocks, including those of Tesla, the electric car maker Musk leads and which is his main source of wealth.

Twitter still maintains that it worked with Musk to close the deal and intends to see the deal. In the settlement agreement, Twitter and Mr Musk have a so-called specific performance clause that allows the company to sue to force the deal through, as long as the debt the billionaire signed for the acquisition remains intact. .

A Twitter spokesman declined to comment.

Ann Lipton, a professor of corporate governance at the Tulane School of Law, said it’s clear why Twitter is growing at such a rapid pace that Musk hasn’t.

“The Twitter board is always interested in getting this resolved quickly, and he is interested in procrastination – time is money,” she said. Of Mr Musk, she added, “He’s going to want to explore as much as possible and spend as much time as he can, essentially hanging the threat of litigation itself and, over time, non-compliance. definitely related to it forcing some kind of settlement or backtracking. “

In the legal filing, Musk’s attorneys reiterated many of the arguments they made this month when the billionaire said he intends to close the deal.

Twitter failed to conduct rigorous checks on fake accounts and thwarted Mr. Musk’s efforts to understand how to check for spam, the filing said. “Musk was surprised at how sketchy Twitter’s workflow was,” the filing said, noting that the company uses humans to learn information rather than machine learning.

Musk tried to get more data from Twitter about the fake accounts, the filing added, but the company “intentionally erected artificial barriers and frustrated the defendants’ efforts.”

To determine how Twitter counts fake accounts, Musk needs months of discovery and dozens of deposits, his attorney said. Musk thinks Twitter’s public disclosures that fake accounts make up about 5% of active users are misleading. The inaccurate figures could have a “severely adverse effect” under the terms of the deal and allow Mr Musk to walk away, his attorney said, arguing the numbers were “direct” to Twitter’s potential value to users and advertisers.”

Twitter has made a mistake with its user count previously, Musk’s lawyers said. In April, the company said it had exceeded the number of active users from 2019 to 2021.

In the lawsuit, the company said it informed Mr. Musk’s lawyers about the two executives and that the attorneys had “no objection”.

Twitter and Mr Musk are scheduled to testify on the case on Tuesday at Chancery Court in Delaware, where the company filed a lawsuit against the billionaire. The Chancellor of the court, Kathaleen St. J. McCormick, has been appointed to oversee the case and will decide whether to expedite the case at Twitter’s request or delay it for Mr. Musk.

If the case moves to trial, Judge McCormick will determine whether Musk must close the deal. She could also let Mr. Musk walk away while forcing him to pay damages. According to multiple readers of Twitter’s contract with Musk, damages will be limited to $1 billion. The two sides can also negotiate or renegotiate the agreement.

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

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