Twitter accused Elon Musk in the lawsuit of abandoning a planned acquisition of the company because stock market turbulence made the deal difficult for him. But after the legal filing, Mr. Musk says it was Twitter that ruined the $44 billion acquisition.
Mr Musk claims Twitter hid the true number of inauthentic accounts on its platform and accused the company of fraud. Such accounts accounted for at least 10 percent of Twitter’s daily active users who see ads, Mr. Musk’s legal team argued, echoing concerns he expressed shortly after the deal was signed in April. Twitter claims the figure is less than 5 percent.
“Twitter miscounted the number of false and spam accounts on its platform as part of its scheme to mislead investors about the company’s prospects,” Mr. Musk’s lawyers wrote. “Twitter disclosures slowly unfold, Twitter furiously slams the floodgates on information in a desperate bid to prevent Musk’s parties from exposing his fraud.”
A confidential submission last Friday, parts of which were Twitter made the announcement on Thursday The response, which dismissed many of Mr Musk’s claims, was his first extensive response to what is expected to be a protracted legal battle between the social media company and one of the world’s richest men. The trial is scheduled for October.
“His claims are factually inaccurate, legally insufficient and commercially inappropriate,” Brett Taylor, Twitter’s chairman, said in a statement Thursday.
Mr. Musk began acquiring shares in Twitter earlier this year and by April had amassed a majority stake in the company. He turned down Twitter’s offer to join its board, instead launching a swift and aggressive takeover effort. But after Twitter agreed to the acquisition, Mr. Musk began to express doubts. In July, he indicated that he no longer wanted to buy the company.
Twitter sued him in Delaware’s Chancery Court to force the purchase. Twitter said it had lost interest in the deal as the market fell and shares of Twitter and electric car maker Tesla, the main source of Mr Musk’s wealth, declined.
“Musk is refusing to fulfill his obligations to Twitter and its shareholders because the deal he signed no longer serves his personal interests,” Twitter said in the lawsuit.
Over the past few days, the company has subpoenaed Mr. Musk’s banks, financial partners and associates seeking communications about the deal, which could shed light on why Mr. Musk decided to leave.
The deal includes a “specific performance” clause that allows Twitter to sue to force the deal before the debt the billionaire incurred for the acquisition is paid off. But Mr. Musk may have to pay $1 billion to get out of the deal if his funding is cut.
Mr. Musk claims that Twitter is full of fake accounts and that the company misled him about the true number of imposters on its platform. Fake accounts are used to spread spam or manipulate the Twitter service by falsely amplifying trends, and are often automated rather than by real people.
This is a developing story. Check for updates.