The logo for Twitter appears above a trading post on the floor of the New York Stock Exchange in this Nov. 29, 2021, file photo.
In April, Twitter accepted American billionaire Elon Musk’s offer to buy the social media service for $44 billion.
But earlier this month, Musk withdrew his offer. Twitter reacted by bringing a legal case against Musk to force him to buy the company.
Why did Twitter take Musk to court?
Legal experts say Twitter wants to complete the deal that both sides agreed to. The company said Musk's reasons for backing out are just a cover for changing his mind.
In April, Musk offered to pay $54.20 a share for Twitter. The company accepted the offer after opposing the sale earlier.
Musk accused Twitter of not giving him enough information about how many spam accounts appear on the service. But Twitter argues that Musk is refusing “to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”
Musk agreed to pay 38 percent above Twitter's stock price at the time he offered a “take it or leave it” deal, the legal case states. But soon after, the stock market suffered a big drop. Many stocks lost value. This led to shares of electric carmaker Tesla, which Musk owns, to lose more than $100 billion in value. Most of Musk's personal wealth comes from his holdings of Tesla stock.
What happens next?
If the two sides do not reach a settlement out of court, the case will go to trial and a judge could start making decisions this summer. Twitter has told its employees it asked for an “expedited trial" to be heard in September. The company said it is “critically important" to get the case tried quickly.
But experts say a trial could last weeks or longer. “Twitter would probably want to get things done fast. Elon, I don’t know,” Lawrence Cunningham told The Associated Press. He is a law professor and corporate legal expert at George Washington University in Washington, D.C.
How has Musk reacted?
Musk reacted officially to Twitter’s legal case, or lawsuit, on Friday. His lawyers gave a written request to the court hearing the case in the northeastern state of Delaware.
In the request, Musk again accused Twitter of keeping spam account data from him. The document also disputed Twitter’s request for an “expedited” trial. Musk’s lawyers said it would take months to gather information from Twitter on the spam account issue and to identify and speak to witnesses.
The document also repeated several other accusations Musk has made in the past. They include a claim that Twitter violated terms of the deal when it dismissed two high-level company officials without first informing Musk.
What are the sides arguing about?
The spam account question will likely be a central part of the case. That is the main reason Musk gave for backing out of or withdrawing from the deal.
Twitter claims in its lawsuit that Musk started saying he wanted to buy Twitter to remove “crypto spam.” Musk said he considered it a “major blight on the user experience.”
But Twitter claims that, when the stock market dropped, “Musk shifted his narrative.” The company said the billionaire then demanded proof that spam was not a serious problem on the service.
The court will examine whether the spam issue presents a “material breach" of Twitter's obligation in the deal, as Musk claims. On the other hand, it will look at whether Musk violated his obligation to follow through with the contract that he signed.
Could Musk be forced to buy Twitter?
Legal experts say it is possible that a court could force Musk to buy Twitter. But others say the court may not go that far.
Another outcome could be for the court to force Musk to pay $1 billion. That is an amount each side agreed to if Musk fails to complete the deal. Or Musk might have to pay another amount without buying the company for $44 billion.
Words in This Story
spam – n. unwanted internet messages
obligation – n. something a person does because it is their duty, or they feel they have to
irony – n. a situation in which the opposite happens than what was expected
expedite – v. to make a process of action happen more quickly
blight – n. something that has a very bad effect on something
shift – n. change a course of action
narrative – n. a story or description of events
breach – n. an action that breaks a rule, agreement or law