Twitter sues Elon Musk for backing out of $44 billion merger

AppleInsider

Twitter has sued Elon Musk, hoping to force the billionaire to buy the social media platform at the agreed price of $54 per share.

Elon Musk

As Bret Taylor, chairman of the board at Twitter, suggested on Monday, Twitter has sued Musk after he called off the $44 billion deal.

"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," read the lawsuit, spotted by Reuters.

In April, Twitter announced that it has accepted Elon Musk's offer to purchase the company for $44 billion, for $54.20 a share.

In May, Musk announced that he would temporarily halt his purchase of the social media while he sought to confirm how many accounts on the platform were spam accounts.

The Tesla CEO claimed that he would walk away from the deal if fake accounts comprised more than 5% of Twitter's total user base.

Read on AppleInsider

22july2013

I was wondering what laws may apply to people who "pump and dump", and I found this on the Internet. I'm not saying that Musk is guilty. I have no idea. In fact, Twitter itself could be guilty of one of these laws. In addition to all these laws, there's also the question of "contract violation" which would have to be resolved in civil court, or be settled out of court.

There are a variety of laws that make pump and dump illegal including:

• Section 17(A) of the Securities Act of 1933: The Securities Act prohibits anyone involved in selling or offering securities to participate in a scheme to defraud. Section 17(A) specifically criminalizes making material misstatements, omitting material facts, or otherwise participating in a scheme to defraud potential purchasers of securities.

• Rule 10b-5 of the Securities Exchange Act of 1934: The Securities Exchange Act broadly prohibits any fraud, material misstatements, or material omissions in connection with the purchase or sale of securities.

• 18 U.S. Code Section 1343: This wire fraud statute criminalizes any fraud scheme that uses wire, radio, or television communications. If the Internet is used as part of a pump and dump scheme or if faxes are sent out to pump a stock, you can be charged with this offense.

• 18 U.S. Code Section 1341: This statute broadly prohibits fraud and swindles, including fraud schemes using the postal service. If false reports about the company or other marketing materials were sent via mail, you may be charged with postal fraud.

netrox

If Elon Musk asked for bot account and Twitter failed to provide that, then I don't see how it's illegal or how he can be sued.
 
It's same with buying a house, a buyer want to have the house inspected and all questions answered before full purchase begins. If the seller fail to provide everything the buyer ask for, the seller has no right to sue. 

sconosciuto

Except he’s not buying a house so your analogy falls flat on its face.

I would be shocked if Twitter hadn’t covered this exact contingency in the contract.

Occam’s Razor says this is simply a sociopathic billionaire (but I repeat myself) trying to back out of a bad deal he made.

Stabitha_Christie

netrox said:

If Elon Musk asked for bot account and Twitter failed to provide that, then I don't see how it's illegal or how he can be sued.
 
It's same with buying a house, a buyer want to have the house inspected and all questions answered before full purchase begins. If the seller fail to provide everything the buyer ask for, the seller has no right to sue. 

Not exactly, Musk and Twitter signed a contract and that becomes the governing document for the deal. As part of the deal Musk waived his right to due diligence. Per your analogy that would be like making an offer for a house and waiving your right to have it inspected. Per the contract he did have the option to drop out of the deal for no reason but only if he paid Twitter a billion dollars. He is trying to get out of the deal without paying the billion and using bots as the reason but waiving his right to due diligence is what will potentially sink him here.  Correction, he doesn't have a billion dollar exit option, the contract allows Twitter to force him to get the financing and close the deal.  

emig647

I feel like I missed something. I thought Twitter provided Musk with the firehose of data so his team could detect the number of bots? https://www.nytimes.com/2022/06/08/technology/twitter-musk-firehose-tweets.html

I guess there is some ambiguity around the percentage of bots that get counted towards advertising numbers and that is what Musk is fighting. This could get messy, but I think with Musk waiving his right for Due Diligence he may get burned on this. This whole situation was really bizarre. 

FileMakerFeller

There's a great summary from Matt Levine at Bloomberg: https://www.bloomberg.com/opinion/articles/2022-05-13/elon-musk-trolls-twitter

TL;DR - Musk continues to act like the laws don't apply to him, as a practical matter they probably don't, but Twitter holds all the aces.

JWSC

sconosciuto said:

Except he’s not buying a house so your analogy falls flat on its face.

I would be shocked if Twitter hadn’t covered this exact contingency in the contract.

Occam’s Razor says this is simply a sociopathic billionaire (but I repeat myself) trying to back out of a bad deal he made.

Inspection of a house before committing money is a perfectly apt example.  I wouldn’t be too sure that Twitter management covered any contingency like this is the contract. Twitter recently lost over $1.5B within an 18 month period.  So these guys haven’t exactly been on the ball.

sconosciuto

FileMakerFeller said:

There's a great summary from Matt Levine at Bloomberg: https://www.bloomberg.com/opinion/articles/2022-05-13/elon-musk-trolls-twitter

TL;DR - Musk continues to act like the laws don't apply to him, as a practical matter they probably don't, but Twitter holds all the aces.

And that’s why I keep pounding on these two points: 

1) All billionaires are sociopaths. Wealth changes people who have it as well as everyone who surrounds them, no question about it. No one person should have the power that comes with that much wealth when they are a sociopath.

One cannot have that kind of extreme wealth and not become detached from one’s humanity.

2) therefore we must #abolishbillionaires

JWSC

Stabitha_Christie said:

netrox said:

If Elon Musk asked for bot account and Twitter failed to provide that, then I don't see how it's illegal or how he can be sued.
 
It's same with buying a house, a buyer want to have the house inspected and all questions answered before full purchase begins. If the seller fail to provide everything the buyer ask for, the seller has no right to sue. 

Not exactly, Musk and Twitter signed a contract and that becomes the governing document for the deal. As part of the deal Musk waived his right to due diligence. Per your apology that would be like making an offer for a house and waiving your right to have it inspected. Per the contract he did have the option to drop out of the deal for no reason but only if he paid Twitter a billion dollars. He is trying to get out of the deal without paying the billion and using bots as the reason but waiving his right to due diligence is what will potentially sink him here. 

Interesting.  Where did you find this information?

Stabitha_Christie

JWSC said:

Stabitha_Christie said:

netrox said:

If Elon Musk asked for bot account and Twitter failed to provide that, then I don't see how it's illegal or how he can be sued.
 
It's same with buying a house, a buyer want to have the house inspected and all questions answered before full purchase begins. If the seller fail to provide everything the buyer ask for, the seller has no right to sue. 

Not exactly, Musk and Twitter signed a contract and that becomes the governing document for the deal. As part of the deal Musk waived his right to due diligence. Per your apology that would be like making an offer for a house and waiving your right to have it inspected. Per the contract he did have the option to drop out of the deal for no reason but only if he paid Twitter a billion dollars. He is trying to get out of the deal without paying the billion and using bots as the reason but waiving his right to due diligence is what will potentially sink him here. 

Interesting.  Where did you find this information?

The offer to buy Twitter is a public fling with the SEC. I did make one mistake about the billion dollar break up fee, that was incorrect and I updated my post. The link above that FileMaker Feller posted is well sourced,  I'd suggest you read that or just fire up google, duck duck go or whatever your search engine of choice is and start searching. His offer is well covered by just about any news outlet. 

JWSC

Stabitha_Christie said:

JWSC said:

Stabitha_Christie said:

netrox said:

If Elon Musk asked for bot account and Twitter failed to provide that, then I don't see how it's illegal or how he can be sued.
 
It's same with buying a house, a buyer want to have the house inspected and all questions answered before full purchase begins. If the seller fail to provide everything the buyer ask for, the seller has no right to sue. 

Not exactly, Musk and Twitter signed a contract and that becomes the governing document for the deal. As part of the deal Musk waived his right to due diligence. Per your apology that would be like making an offer for a house and waiving your right to have it inspected. Per the contract he did have the option to drop out of the deal for no reason but only if he paid Twitter a billion dollars. He is trying to get out of the deal without paying the billion and using bots as the reason but waiving his right to due diligence is what will potentially sink him here. 

Interesting.  Where did you find this information?

The offer to buy Twitter is a public fling with the SEC. I did make one mistake about the billion dollar break up fee, that was incorrect and I updated my post. The link above that FileMaker Feller posted is well sourced,  I'd suggest you read that or just fire up google, duck duck go or whatever your search engine of choice is and start searching. His offer is well covered by just about any news outlet. 

Thanks.  I’ll check out the actual SEC filing, assuming I can find it, rather than rely on reporting.  Too much room for misinterpretation.

ericthehalfbee

How many fukking idiots do we need in every Musk/Twitter story talk about bots or Twitter not giving up that information when Musk waived due diligence? Seriously, how stupid are you?

NVM, some people still think Trump won or the Earth is flat. Why should they limit their stupidity to those two when they can add Musk/bots to their arsenal?

george kaplan

sconosciuto said:

Except he’s not buying a house so your analogy falls flat on its face.

I would be shocked if Twitter hadn’t covered this exact contingency in the contract.

Occam’s Razor says this is simply a sociopathic billionaire (but I repeat myself) trying to back out of a bad deal he made.

1) Bot info is part of the SEC filing info Twitter long ago made public. This is a sham misdirection argument.

2) To your homebuying analogy, if I offer to buy your home with no contingencies and waive due diligence, and during the closing black mold is discovered in the home, that is my problem, not yours. Musk waived the due diligence portion of the purchase offer. Was that bravado, hubris, or was he just high—you did notice his offer price was $54.20, right?—we may never know. But the odds of backing out of this deal are minuscule.

Musk’s obfuscation and hostile posturing during this mess has ruined Twitter stock price. His offer was financially insupportable when it was made, and got even worse in the weeks which followed. The Board of Twitter can’t simply allow this to pass and the $1B “break-up fee” (which doesn’t apply unless his funding falls through, which isn’t what Musk is claiming) won’t repair the share damage Musk has caused.

davidlewis54

The home buying and selling analogy as a general thing is hard to use as ultimately any deal depends on its contract. If you find black mould (I’m in the UK) after you’ve bought, it could be your survey didn’t pick up the damp or you didn’t see it.  That would be down you. However, if you asked the seller, perhaps thinking the property might have damp, if the property suffers from mould and the seller says no, knowing there is, that is a misrepresentation so an actionable matter. As I imagine you’re in the US you’d immediately rush off to court claiming billions in damages! In the Twitter/Musk case, and assuming the contract contains the relevant provisions, the questions which have to be answered are (1) can Twitter identify spam and bot accounts and (2) if it can, has it passed the information along. Musk, if he has been given the data is responsible for sifting it to answer his own questions, this being part of his due diligence. Is it, perhaps some buyer’s remorse that having offered the amount per share he did, the value of the shares has dropped, making his purchase not seem such a good idea. This flipping and flopping merely brings the share price down further, so the gamble is to sue, bring the price right down and then re-bid. Neat.

tshapi

I think this is a money grab by twitter.  See, musk has claimed he doesn’t believe that twitter is being honest about the # of bots. And it appears that twitter is simply pointing to there public SEC filing as proof that there really is only 5% bots. 

I also find it interesting that jack dorsey is quiet through all this. He’s allegedly musks ally in this, he created twitter and it’s my understanding that he was still an active part of the
Company. 

As I said uptop. This is a money grab. When Elon made the offer, the main reason it was accepted is because the investors got a financial offer that was hard for them to pass up.  

I also think it’s possible that this is a war between Elon musk and the current CEO who doesn’t want to lose his job. 

CheeseFreeze

netrox said:

If Elon Musk asked for bot account and Twitter failed to provide that, then I don't see how it's illegal or how he can be sued.
 
It's same with buying a house, a buyer want to have the house inspected and all questions answered before full purchase begins. If the seller fail to provide everything the buyer ask for, the seller has no right to sue. 

It depend under which circumstances.

If he came up with this demand as part of the agreement (“there must be no more than x% bot accounts or this short-form purchase agreement is void without penalties”) then he should be fine.

If he introduced this demand after the initial agreement, then he’s in trouble. 

It would be the same thing as signing to purchase a car within the next 30 days and then suddenly demand that the seller needs to prove that the car should at least run 500 miles on a tank of gas. 

Regardless of the car’s ability or reasonable expectation to do so, it is something you’d had to put in writing on as part of the purchase contract. 

What if the car actually would run 500 miles, and suddenly you’d posed yet another demand that the seats should be able to recline 80 degrees?
What if you’d introduce these demands knowing that the car isn’t able to do those things, just so you can talk your way out of it?

With a merger/acquisition normally you discuss a due diligence phase that happens before the actual purchase (and is done after a letter of intent or short form agreement). This due diligence phase could take a long time in some cases and contain clauses with roles and responsibilities for both companies. It’s like test driving the car and asking a mechanic to look under the hood to see if it’s a healthy car. This happens both ways: the seller would check out the buyer in a similar fashion.

Also, consider the below:

https://www.firstpost.com/tech/news-analysis/explained-how-elon-musk-twitter-bid-may-have-been-a-smokescreen-to-liquidate-tesla-stocks-10896291.html/amp

tshapi said:

I think this is a money grab by twitter.  See, musk has claimed he doesn’t believe that twitter is being honest about the # of bots. And it appears that twitter is simply pointing to there public SEC filing as proof that there really is only 5% bots. 

I also find it interesting that jack dorsey is quiet through all this. He’s allegedly musks ally in this, he created twitter and it’s my understanding that he was still an active part of the
Company. 

As I said uptop. This is a money grab. When Elon made the offer, the main reason it was accepted is because the investors got a financial offer that was hard for them to pass up.  

I also think it’s possible that this is a war between Elon musk and the current CEO who doesn’t want to lose his job. 

I think it’s actually a money grab by Tesla (see above link). 

A good sale opportunity to Twitter is not a ‘money grab’ (assuming the word has a negative connotation) by Twitter especially because they did not seek to be bought. Musk offered to buy.

Jack Dorsey is quiet because it is professional. A CEO doesn’t move a purchase dispute onto a public forum. It’s unprofessional and dangerous.
 

Twitter however did officially respond (on Twitter), and as it should be in these specific situations, it comes from the board of directors. 

tmay

CheeseFreeze said:

netrox said:

If Elon Musk asked for bot account and Twitter failed to provide that, then I don't see how it's illegal or how he can be sued.
 
It's same with buying a house, a buyer want to have the house inspected and all questions answered before full purchase begins. If the seller fail to provide everything the buyer ask for, the seller has no right to sue. 

It depend under which circumstances.

If he came up with this demand as part of the agreement (“there must be no more than x% bot accounts or this short-form purchase agreement is void without penalties”) then he should be fine.

If he introduced this demand after the initial agreement, then he’s in trouble. 

It would be the same thing as signing to purchase a car within the next 30 days and then suddenly demand that the seller needs to prove that the car should at least run 500 miles on a tank of gas. 

Regardless of the car’s ability or reasonable expectation to do so, it is something you’d had to put in writing on as part of the purchase contract. 

What if the car actually would run 500 miles, and suddenly you’d posed yet another demand that the seats should be able to recline 80 degrees?
What if you’d introduce these demands knowing that the car isn’t able to do those things, just so you can talk your way out of it?

With a merger/acquisition normally you discuss a due diligence phase that happens before the actual purchase (and is done after a letter of intent or short form agreement). This due diligence phase could take a long time in some cases and contain clauses with roles and responsibilities for both companies. It’s like test driving the car and asking a mechanic to look under the hood to see if it’s a healthy car. This happens both ways: the seller would check out the buyer in a similar fashion.

Also, consider the below:

https://www.firstpost.com/tech/news-analysis/explained-how-elon-musk-twitter-bid-may-have-been-a-smokescreen-to-liquidate-tesla-stocks-10896291.html/amp

tshapi said:

I think this is a money grab by twitter.  See, musk has claimed he doesn’t believe that twitter is being honest about the # of bots. And it appears that twitter is simply pointing to there public SEC filing as proof that there really is only 5% bots. 

I also find it interesting that jack dorsey is quiet through all this. He’s allegedly musks ally in this, he created twitter and it’s my understanding that he was still an active part of the
Company. 

As I said uptop. This is a money grab. When Elon made the offer, the main reason it was accepted is because the investors got a financial offer that was hard for them to pass up.  

I also think it’s possible that this is a war between Elon musk and the current CEO who doesn’t want to lose his job. 

I think it’s actually a money grab by Tesla (see above link). 

A good sale opportunity to Twitter is not a ‘money grab’ (assuming the word has a negative connotation) by Twitter especially because they did not seek to be bought. Musk offered to buy.

Jack Dorsey is quiet because it is professional. A CEO doesn’t move a purchase dispute onto a public forum. It’s unprofessional and dangerous.
 

Twitter however did officially respond (on Twitter), and as it should be in these specific situations, it comes from the board of directors. 

Some details;

https://nymag.com/intelligencer/2022/07/twitters-lawsuit-against-elon-musk-15-revelations.html

and;

https://www.documentcloud.org/documents/22084462-twitter-v-elon-musk-complaint?responsive=1&title=1

Elon fucked up. Whether he will end up owning Twitter after the lawsuit is adjudicated, is all that is left.

YP101

Anyway.. TWTR already exposed as even they can not calculate bot in everyday active.
So why advertiser paid for ad on TWTR as how many people will see their ad?
I think TWTR is reach the dead end at this point. They must sold to Musk or they will sink from now on. 

Anyway who cares at this point. It is not like Musk did not know what he get into.
Let them fight on the court and see how deep is this rabbit hole goes.

AI_lias

Interesting stuff from Axios:

1. Twitter has sought multiple times to put in place a program to pay top employees to stay through the merger, but Musk has not given a needed OK.

• "Musk has unreasonably withheld consent to two employee retention programs designed to keep selected top talent during a period of intense uncertainty generated in large part by Musk’s erratic conduct and public disparagement of the company and its personnel," Twitter said in the suit — a time when employee attrition "has been on the upswing."

2. Musk brought in former Intel CEO Bob Swan to act as his advisor, only to later push him out, notifying Twitter in a June 23 text message that he had asked Swan "to depart the deal proceedings, as we are not on the same wavelength."

3. Twitter CFO Ned Segal tried several times to set up a meeting with Musk to discuss the company's methodology for determining the percentage of fake accounts, but Musk declined a meeting, while still saying Twitter had not provided the info he needed

sconosciuto

ericthehalfbee said:

How many fukking idiots do we need in every Musk/Twitter story talk about bots or Twitter not giving up that information when Musk waived due diligence? Seriously, how stupid are you?

NVM, some people still think Trump won or the Earth is flat. Why should they limit their stupidity to those two when they can add Musk/bots to their arsenal?