As promised, Twitter is taking Elon Musk to court. The social media site has sued the Tesla CEO, claiming he cannot back out of his commitment to acquire the company.
On Friday, just under three months after declaring his intent to purchase Twitter and take it private, Musk said he is backing out of the deal. Twitter's board quickly responded that it was prepared to take legal action to ensure the deal closes at a price of $54.20 per share.
"Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests," the company said in its suit, filed in the Delaware Court of Chancery. "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."
The suit further claims that "a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business."
Twitter has been in a state of turmoil since April, when Musk said he wanted to buy the social media platform. He lined up $46.5 billion in financing to back his unsolicited bid, relying on loans and $33.5 billion from his own equity.
As the deal materialized, some of Twitter's top executives were pushed out of the company and others resigned. As recently as this week, the company laid off a third of its talent acquisition team.
However, the eccentric billionaire businessman quickly began suggesting the deal was "on hold," complaining about the number of fake accounts on the Twitter platform. The document filed with the SEC on Friday said that information about fake or spam accounts is "fundamental to Twitter's business and financial performance."
In its own complaint, Twitter alleges that Musk is changing his story simply because the market fell. "Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter's Stockholders."