Twitter Sues Elon Musk After Billionaire Backs Out Of $44B Deal

SAN FRANCISCO — Twitter has sued billionaire Elon Musk after the world's richest man made a bombshell announcement last week that he was dropping his $44 billion bid to buy the social media platform.

Musk agreed to buy Twitter, based in San Francisco, in April. As San Francisco Patch previously reported, the deal unraveled Friday when the Tesla CEO said he was terminating his acquisition. On his quest to take control of the company, Musk, who has more than 95 million followers on the social media platform, accused Twitter of failing to be a platform that guarantees free speech.

Twitter sued Musk in Chancery Court in Delaware, The New York Times reported.

"In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done," the lawsuit said. "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. 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."

Musk signed a legally binding agreement with Twitter, in which Twitter reportedly included a clause allowing it to sue to force the deal through if the debt for the acquisition remains in place.

Last month, Twitter's board recommended that its shareholders approve the $44 billion sale to Musk. The recommendation came in a regulatory filing, in which the company said its board of directors unanimously determined the merger agreement "is advisable and the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Twitter and its stockholders."

Musk previously threatened to throw the deal out over doubts about the number of existing spam and fake Twitter accounts. He has said he doesn't believe Twitter's statements that about 5 percent of its active users are bots.

He had said three hurdles remain before he could buy the platform. He wanted Twitter to clarify how many users are real.

In a letter to the Securities and Exchange Commission, Musk said Twitter has "not complied with its contractual obligations" surrounding the deal, namely giving Musk enough information to "make an independent assessment of the prevalence of fake or spam accounts on Twitter's platform."

Musk's interest in buying Twitter appeared to arise in late March, when Twitter said he contacted members of its board and told them he was buying up shares of the company and interested in either joining the board, taking Twitter private or starting a competitor.

Then, on April 4, he revealed in a regulatory filing that he had become the company's largest shareholder after acquiring a 9% stake worth about $3 billion.

At first, Twitter offered Musk a seat on its board. But six days later, Twitter CEO Parag Agrawal tweeted that Musk will not be joining the board after all. His bid to buy the company came together quickly after that.

Musk had agreed to buy Twitter for $54.20 per share, inserting a "420" marijuana reference into his offer price. He sold roughly $8.5 billion worth of shares in Tesla to help fund the purchase, then strengthened his commitments of more than $7 billion from a diverse group of investors, including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.

Inside Twitter, Musk's offer was met with confusion and falling morale, especially after Musk publicly criticized one of Twitter's top lawyers involved in content-moderation decisions.

As Twitter executives prepared for the deal to move forward, the company instituted a hiring freeze, halted discretionary spending and fired two top managers. The San Francisco company has also been laying off staff, most recently part of its talent acquisition team.

The Associated Press contributed reporting.