Twitter has accused Elon Musk in a lawsuit of halting his planned acquisition of the company because the stock market turbulence made the deal more difficult for him. But Mr Musk is firing back in a legal filing, saying it was Twitter that torpedoed the $44 billion takeover.
Mr Musk argues that Twitter hid the actual number of inauthentic accounts on its platform and accused the company of fraud. Such accounts made up at least 10 percent of Twitter’s daily active users who see ads, Mr. Musk’s legal team claimed, reiterating his concerns he expressed shortly after signing the deal in April. Twitter insists the figure is less than 5 percent.
“Twitter miscounted the number of fake and spam accounts on its platform as part of its plan to mislead investors about the company’s prospects,” Mr. Musk’s lawyers wrote. “Twitter’s revelations have slowly unraveled, with Twitter frantically closing its gates to information in a desperate attempt to prevent the Musk parties from exposing its fraud.”
Last Friday’s confidential submission, parts of which were: announced on Thursday by Twitter in a response that denied many of Mr. Musk’s claims, his first comprehensive response was in what is expected to be a protracted legal battle between the social media company and one of the world’s richest people. There will be a trial in October.
“His claims are factually false, legally inadequate and commercially irrelevant,” Twitter chairman Bret Taylor said in a statement on Thursday.
Mr. Musk began buying shares on Twitter early this year and had built up a majority stake in the company by April. He rejected Twitter’s offer to join the board, instead launching a swift and aggressive takeover attempt. But when Twitter agreed to the takeover, Musk began to voice his doubts. In July, he indicated that he no longer wanted to buy the company.
Twitter sued him in Delaware Chancery Court in an attempt to push the takeover. Twitter has claimed it lost interest in the deal when the market collapsed and shares in Twitter and the electric car maker Tesla, the main source of Mr Musk’s wealth, fell.
“Musk is refusing to honor his obligations to Twitter and its shareholders because the deal he signed no longer serves his personal interests,” Twitter said in his lawsuit.
In recent days, the company has peppered Mr. Musk’s banks, financial partners and employees with subpoenas and demanded communications about the deal that could shed light on why Mr. Musk decided to walk away.
The deal includes a “specific performance” clause that allows Twitter to sue to push through the deal as long as the debt incurred by the billionaire for the takeover remains. But Mr. Musk could pay a $1 billion fee to end the deal if his funding falls.
Mr Musk has maintained that Twitter is inundated with fake accounts and that the company has misled him about the true number of cheaters on his platform. Fake accounts are used to spread spam or manipulate Twitter’s service by falsely reinforcing trends, and are often automated rather than managed by real people.
This is a story in development. Come back for updates.