The battle between Twitter and Elon Musk is going to the courts.
Twitter filed a lawsuit against Musk on Tuesday (July 12) in the Delaware Court of Chancery, seeking to hold the SpaceX and Tesla chief to his agreement to buy the social media company for $44 billion. Musk announced that agreement in April but last week filed paperwork to pull out of it.
“Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” Twitter’s lawsuit reads, according to The New York Times (opens in new tab). “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.”
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Elon Musk has a different view of the matter, of course. Not long after announcing the planned acquisition, he said he would go through with it only if Twitter could show to his satisfaction that bots — fake or spam accounts — make up less than 5% of the platform’s users.
In the back-out paperwork filed last week, Musk’s lawyers wrote that “Twitter had failed or refused to respond to multiple requests for information on fake or spam accounts on the platform, which is fundamental to the company’s business performance,” according to Reuters (opens in new tab).
“Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement,” the filing further states.
The Delaware Court of Chancery, which has been resolving disputes since 1792, has now been tasked with sorting things out. (Like most Fortune 500 companies, Twitter is officially registered in Delaware, which offers tax breaks and other perks to draw businesses in.)
“Twitter is seeking a four-day trial this September,” The New York Times wrote. “The deal has a deadline of Oct. 24 to be completed. Should the transaction still be awaiting regulatory approval at that time, Mr. Musk and Twitter would have another six months to close it.”
There are a variety of potential outcomes, experts say. The court could rule for Twitter, forcing Musk to honor the original deal, or it could allow the billionaire to walk away. The two sides could also negotiate, with Musk ultimately buying Twitter for a lower price.
Mike Wall is the author of “Out There (opens in new tab)” (Grand Central Publishing, 2018; illustrated by Karl Tate), a book about the search for alien life. Follow him on Twitter @michaeldwall (opens in new tab). Follow us on Twitter @Spacedotcom (opens in new tab) or on Facebook (opens in new tab).