Twitter’s lawyers assailed Elon Musk in a new court filing on Thursday, claiming that the billionaire is trying to extricate himself from his $44 billion acquisition agreement because “the stock market—and along with it, his massive personal wealth”—have declined in value.
The attorneys rebuffed the notion that Musk had somehow been “hoodwinked” into agreeing to buy the company, noting that he is a “billionaire founder of multiple companies” and has been “advised by Wall Street bankers and lawyers.”
The filing, made in the Delaware Court of Chancery, was submitted in reply to a separate brief Musk had filed late last month. Strangely, Musk’s own filing has not yet been made public, due to possible redactions that still need to occur. That has given Twitter the opportunity to forcefully advance its narrative.
ADVERTISEMENT
“The Counterclaims are a made–for–litigation tale that is contradicted by the evidence and common sense,” Twitter’s filing said, of Musk’s allegations. “Musk invents representations Twitter never made and then tries to wield, selectively, the extensive confidential data Twitter provided him to conjure a breach of those purported representations.”
One of Musk’s primary gripes is about whether Twitter has misrepresented the number of authentic users on its platform. The company has estimated the number of fake accounts, or “bots,” on the platform to be lower than five percent of its users. In his counter filing, Musk claims the percentage is closer to double that number, and that “preliminary expert estimates” showed that one-third of visible accounts in July may have been false or spam accounts.
The billionaire went on to claim that the platform does not have 238 million monetizable daily active users—or users that see ads on the site—and that the number is actually 65 million lower than the company represents. He also claimed that the bulk of Twitter ads are only served to 16 million of its users, much lower than the number he says it “misleadingly” touts to the market.
Twitter, in response, slammed Musk’s bot estimates as “nothing more than the output of running the wrong data through a generic web tool,” and noted that the app he used to arrive at these estimates also previously flagged his own account as a likely fake. The claims about its active daily users, it says, are “wild conclusions” distilled from a distorted version of facts Twitter itself supplied to Musk.
Attorneys for Musk did not immediately respond to The Daily Beast’s request for comment.
The social media giant is hoping a judge will force Musk to comply with the terms of the buyout deal, which did not grant him the right to additional due diligence. Some legal experts have expressed doubt about whether Musk’s arguments will hold up, noting that the Delaware Court of Chancery has historically taken a narrow view of when buyers can renege on agreements like the one he signed.
Twitter’s dealings with Musk have caused non-stop headaches for its execs since last spring, when Musk first declared that he had amassed a significant ownership percentage in the business. He subsequently agreed to join the company’s board, then changed his mind at the last minute.
Soon after, Twitter enacted a so-called “poison pill” to impede Musk’s ability to amass a controlling stake in the business. Eventually, the billionaire made a proposal to buy out the entire company at a price of $54.20 per share (marijuana reference likely intentional), and Twitter’s board agreed.
But the stock market quickly tanked, and Twitter’s stock is now trading at roughly $41 per share. (The stock has rallied in recent weeks, perhaps because some investors think the deal will ultimately go through.)
Unless the parties somehow resolve the dispute on their own, the court will decide what happens next. A trial in the matter is set for October.
