Twitter sues Tesla founder Elon Musk for reneging on $44 billion acquisition deal: Hypocritical strategy to run when stock market crashes

Recently, due to doubts about the data of fake accounts provided by Twitter, Tesla's founder Elon Musk is considering terminating the acquisition deal with Twitter. Shortly after, the social media platform Twitter officially sued Tesla's founder Elon Musk, accusing him of not complying with the acquisition commitments.

Thinking of Running After Stock Market Crashes?

In April of this year, Musk officially reached an agreement with Twitter and committed to making every effort to complete the acquisition. However, Musk later stated that if Twitter could not prove the percentage of fraudulent accounts, the acquisition would not proceed. Twitter filed a lawsuit against Musk, stating that he was refusing his obligation.

Twitter stated that Musk had proposed an acquisition price of about $44 billion, at $54.2 per share, which was a 38% premium at the time. Musk referred to this as a "seller-friendly condition."

In court documents, Twitter quoted The Wall Street Journal, stating that Musk's personal wealth had decreased by over $100 billion after the peak in Tesla's stock price in November 2021. Twitter believes that Musk wants to withdraw as he does not want to bear the costs of the market downturn as required by the agreement, but rather shift it to Twitter's shareholders. This aligns with Musk's strategy towards Twitter and its shareholders since the beginning of this year, accumulating shares without fulfilling disclosure obligations.

Twitter believes that Musk's baseless and malicious allegations against Twitter, and his narrow interpretation of completing the transaction, are unfounded.

Ultimately, on July 8th, Twitter stated that Musk terminated the contract with Twitter using baseless evidence related to fake accounts. Musk's three reasons were:

• Violation of information sharing and collaboration agreement
• Alleged "materially inaccurate statements" in the agreement that could have significant adverse effects on the company
• Termination of certain employees, slowing down hiring, and failing to retain key personnel

Twitter believes that these accusations are merely excuses and unsubstantiated, and Musk's termination of the transaction is invalid. Twitter asserts that the defendant has an obligation to fulfill the agreement and ensure that Twitter shareholders benefit from Musk's transaction. Musk and his entities should be prohibited from further violating the provisions and should fulfill their obligations.

In mid-March, Musk purchased 9.2% of Twitter's stock. After the news was announced in April, the stock price surged significantly, but it has been declining since mid-May, with a closing price of 34.6 at the time of writing.