Elon Musk Charges Twitter With Fraud in Buyout Deal, As per Court Filing
As their legal battle intensifies, Elon Musk has accused Twitter of fraud, arguing that the social media service misled him about important aspects of its business before he agreed to a $44 billion takeover.
As part of his defense against Twitter’s lawsuit attempting to compel him to consummate the deal, which he has attempted to cancel, the Tesla CEO filed the claim late on Thursday.
Musk stated in a document submitted to a Delaware court that the real number of users who see advertisements on the network is around 65 million lower than the company’s 238 million estimates.
“Twitter’s disclosures have slowly unraveled, with Twitter frantically closing the gates on information in a desperate bid to prevent the Musk Parties from uncovering its fraud,” the claim alleged.
The trial is set to commence on October 17, and Musk is requesting that the judge release him from the agreement and ordered Twitter to pay him damages.
Billions of dollars are on the line, but Twitter’s survival is also in jeopardy due to Musk’s absolutist attitude that the platform should let any lawful speech, which has raised concerns that it may be used to encourage violence.
Twitter dismissed the erratic billionaire’s claim in its own lawsuit, labeling it “as implausible and contrary to the fact as it sounds.”
“According to Musk, he — the billionaire founder of multiple companies, advised by Wall Street bankers and lawyers — was hoodwinked by Twitter into signing a $44 billion merger agreement,” Twitter said.
Musk’s countersuit, which was eventually publicized on Thursday, was submitted last week along with a legal argument to refute Twitter’s assertion that he is contractually obligated to complete the acquisition.
The businessman claimed that Twitter not only misled him but also US market regulators.
In his court statement, Musk claimed that he relied on Twitter’s SEC filings because he found it “cost and inefficient” to perform his own due diligence and assess the company’s valuation.
The legal battle is intensifying as preparations are being made for the five-day trial in Delaware’s Chancery Court, which focuses on difficult, important corporate litigation.
This conflict started when Musk offered Twitter’s board $54.20 per share in April, only to announce in July that he was ending their partnership because the company had lied to him about the number of fake and spam accounts it had collected.
Twitter has maintained that fewer than 5% of activity on the platform is caused by software “bots” rather than actual people, with its shares rising about 3.5 percent on Friday to $42.51.
The social media site informed the court that Musk’s assertion that the percentage of false accounts exceeds 10% is “untenable.”
Since Musk didn’t ask for details on that subject when he made the buyout offer, Twitter questioned Musk’s claim that he has the freedom to leave if Twitter’s bot count is discovered to be inaccurate.
The business claims that Musk invented a tale to get out of a merger arrangement that he no longer found appealing.
“Twitter has complied in every respect with the merger agreement,” the company said in the filing made to Chancery Court.
“Musk’s counterclaims, based as they are on distortion, misrepresentation, and outright deception, change nothing.”
A vote on the merger has been scheduled for September 13 after the social media platform asked shareholders to support the agreement.
Musk was questioned about the possibility that his possible ownership of Twitter would interfere with his management of the electric car manufacturer while taking questions at the annual Tesla shareholders meeting on Thursday.
“I think Tesla, you know, would continue to do very well even if I was kidnapped by aliens, or went back to my home planet,” he jokes, drawing laughter and applause.
“To be frank, I don’t have an easy answer,” Musk added.
He gave investors reassurance that he does not currently have any intentions to step down as CEO of Tesla.