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Twitter’s Legal Team Unleashes on Elon Musk, as it Moves to Force Musk to Complete Takeover Deal


Well, this is certainly a pointed opening to Twitter’s legal case against Elon Musk, and his attempt to cancel his $44 billion acquisition of the app:

In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done. Now, less than three months later, Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests. 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.”

Nothing being hidden behind legal jargon there, Twitter is pissed, and they’re now looking to make Elon pay for what he’s done to their stock, their company, their future prospects, etc.

In the latest development in the ongoing Twitter/Musk saga, Twitter has officially launched legal action to counter Musk’s effort to terminate the deal, due to, according to Musk, Twitter’s unwillingness to provide him and his team with adequate data to prove its usage claims , and other elements.

But Twitter says that Musk can’t exit the deal now, and it has a range of examples of bad faith actions and public disclosures on Musk’s part which it says are in violation of the original agreement.

Specifically:

  • Twitter says that Musk has been acting against the proposed deal since the market started its recent downturn, and has breached the merger agreement repeatedly in the process
  • Twitter says that Musk has claimed to put the deal ‘on hold’ pending the satisfaction of ‘imaginary conditions’, and has breached his financing efforts obligations in the process
  • Musk has boasted publicly about violating his non-disclosure obligations under the original contract, both in relation to Twitter’s mDAU metric calculations and other internal data points
  • Musk has also repeatedly violated his non-disparagement obligation in the contract through public criticism of the company, and has misused confidential information in his public statements about fake accounts and Twitter’s processes.
  • Twitter says that one of the main reasons Musk cited for buying Twitter was to rid the platform of bots, which Musk is now using as a reason not to buy it. The two stances seem to conflict

In summary, Twitter says that Musk has leveled serious charges, both publicly and through lawyer letters, that Twitter has misled its investors and customers, which has materially damaged the company’s prospects, in violation of the agreed terms of the acquisition. Additionally, Twitter has outlined, in detail, how it worked to meet all of Musk’s information requests, beyond what it is under obligation to do.

Yet, despite this, Musk is now looking to exit the deal anyway – which, Twitter says, is actually the ultimate plan:

“From the outset, [the] defendants’ information requests were designed to try to tank the deal. Musk’s increasingly outlandish requests reflect not a genuine examination of Twitter’s processes but a litigation-driven campaign to try to create a record of non-cooperation on Twitter’s part. When Twitter nevertheless bent over backwards to address the increasingly burdensome requests, Musk resorted to false assertions that it had not.”

Twitter’s overview is a thorough and scathing assessment of Musk’s actions, which shows that Twitter has been taking notes, and has measured its legal case carefully. In some ways, the submission reads like a list of grievances that Twitter’s been just waiting to air out, and now, with Musk challenging the deal, it has an opportunity to do so.

Which is likely not good – either for Musk or ultimately Twitter itself.

Twitter also makes some interesting revelations about how the Musk push has impacted the company, including this note about employee retention.

“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 […] Employee attrition, meanwhile, has been on the upswing since the signing of the merger agreement.”

Another reason stated by Musk’s team for seeking to exit the deal has been the loss of key executive staff at the company, which materially alters the make-up of the organization. Twitter not only says that this is not part of the original agreement – as it specifically ensured any such provision was left out – but also, as pointed out here, that it has tried to work with Musk to address exactly this either way.

Twitter has also included this description of Musk’s efforts to use its data API to scan for fake accounts:

“Twitter also explained that it had placed “no artificial throttling of rate limits” [on Musk’s access]. In follow-up correspondence, it became clear that the “limit” Musk had bumped up against was not the result of throttling but a default 100,000-per-month limit on the number of queries that could be conducted. With his undisclosed team of data reviewers working behind the scenes, Musk had hit that limit within about two weeks.”

What the heck are Musk and Co. doing there? 10k queries against the data, in two weeks? No idea how they’re trying to find fake and spam accounts, but that seems excessive (Twitter notes that it removed the query cap to enable Musk’s team to continue their analysis).

Overall, what Twitter’s saying here is that it believes Musk has acted in bad faith, and that he’s only seeking to get out of the deal now due to the market downturn, which has impacted his personal wealth, along with overall market performance.

But letting Musk exit now would leave the company in a much worse state:

“Because of the defendants’ breaches and the uncertainty they have generated, Twitter faces irreparable harm. Defendants stipulated in the merger agreement that “irreparable damage for which monetary damages, even if available, would not be an adequate remedy would occur in the event that the parties hereto do not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate this Agreement) in accordance with its specified terms or otherwise breach such provisions.”

There’s also this:

“For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke.”

Richest man in the world or not, Twitter’s sick of Musk’s antics, and it clearly has no intention of letting him off the $44 b hook.

Twitter also reiterates that there is no financing contingency and no diligence condition.

“The deal is backed by airtight debt and equity commitments.”

‘Airtight’, which Twitter will be looking to enforce as it seeks to consummate the Musk deal, whether Elon likes it or not.

And again, the ultimate loser here will be Twitter, the company, which continues to lose staff due to uncertainty, and will eventually end up in the hands of someone who really doesn’t want to own it.

That doesn’t seem like the ideal foundation for future success, but that’s where we’re at.

Musk has not provided any detailed response to Twitter’s counter claims as yet, although he did once again post a cryptic tweet following the release.

Whether Musk will actually be laughing at the end of this seems increasingly doubtful.



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Naveen Kumar

Friendly communicator. Music maven. Explorer. Pop culture trailblazer. Social media practitioner.

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