While the boss of Tesla gave up buying the social network after months of negotiations, he in turn filed a complaint against Twitter on Friday July 29. The trial is due to be held in October.
Elon Musk hits back. While he himself is the subject of a legal action brought by Twitter, he in turn filed a complaint against the social network on Friday July 29, reported the wall street journal.
The complaint was filed in a court in Delaware (United States), specializing in business law, in a “confidential” manner. This procedure is regularly used in proceedings concerning listed companies in order not to reveal sensitive information.
This is why the complaint has not yet been made public. A revised version, without confidential information, could be available this week, according to the American daily. This filing of a complaint adds an episode to the strategic and now judicial soap opera that the billionaire and the social network have been engaged in since mid-April, with a most uncertain outcome.
• Why are Twitter and Elon Musk fighting a legal battle?
The richest man in the world had positioned himself since April 14 on the takeover of the social network, for an amount valuing Twitter at 43 billion dollars. From the beginning of the negotiations, the tone is full-bodied. Elon Musk threatened to “re-examine his position as a shareholder” within the social network in the event of refusal.
After many twists and turns, with the number of fake accounts present on the social network at the heart of the debates, the boss of Tesla gave up acquiring the American company on July 8. Twitter therefore filed a complaint on July 12 to compel Elon Musk to honor his buyout commitment.
• What are the arguments of Elon Musk and Twitter?
The company accuses the boss of Tesla of having retracted with regard to the stock market, in full shock. Elon Musk thus shows a drop in his personal fortune of more than 100 billion dollars compared to its peak in November 2021, according to the Bloomberg Billionaires Index. “Rather than bear the cost of the market decline, as required by the merger agreement, Mr. Musk wants to pass it on to Twitter shareholders,” Twitter said, according to the wall street journal.
For his part, the businessman would accuse the social network of having lied about his real number of users – and this, after having accepted his offer to purchase, affirms the wall street journal.
During the negotiations, Elon Musk wanted to make sure that Twitter did not contain no more than 5% fake accounts. This data is an indicator that is extremely scrutinized by social network investors. Since their revenues are based on the display of advertising to real Internet users, fake accounts are all potential users who cannot actually be monetized.
• What should be expected from the trial?
The trial is to be held from October 17, over five days. The social network, which claims less than 5% of its users are fake accounts, is seeking to enforce the agreement. For his part, Elon Musk has not communicated for the moment on the motivations of his complaint.
If the judge considers that the arguments put forward by Elon Musk are not strong enough to justify the breach of the contract, then the sale could be forced. As part of the negotiations, the two parties also agreed to pay a severance package of up to $1 billion.
If one or other of the parties refuses to comply with the court decision, the court has the necessary powers to impose fines or even freeze the assets.