Lawyers for Elon Musk claim in a recent filing that Twitter misrepresented information about the company and its “key metrics” and misrepresented its value in an attempt to trick the billionaire into agreeing to buy the platform from social media at an inflated price.
The allegations were detailed in a countersuit made public on Thursday. The filing alleges fraud and claims that Twitter made statements in its disclosures to the Securities and Exchange Commission that were “far from true” and “contain numerous material misrepresentations or omissions that misrepresent Twitter’s value.”
Twitter, in its response, said its disclosures to the SEC were accurate and that the company “didn’t misrepresent anything.”
The claim that Musk was “tricked” into signing the merger is “as implausible and factual as it sounds,” said Twitter, and alleged that Musk was making excuses to evade the deal.
Twitter sued Musk last month after Musk sought to back out of a deal to buy the company for $54.20 a share, or $44 billion, and take it private. Since Musk made his first bid on Twitter in April, the social media platform’s stock price has fallen to $41, leading some, including Twitter itself, to speculate that Musk just looking for a lower price for the business.
Musk, in turn, accused Twitter of withholding data on the volume of fake accounts and spam on its site, arguing that the company misled investors about how many active users it actually has. Much of the countersuit focuses on these accounts and active user numbers.
Twitter has responded to these claims in the past by saying it gave Musk all the information he requested.
Now Twitter is going to court to force Musk to go through with the sale.
It’s one of many twists Musk’s bid for the company has taken over the past four months.
It all started when Musk became Twitter’s largest public shareholder in April, declaring holdings of more than 9% of the company’s stock.
Originally, Musk was going to sit on Twitter’s board as part of his stake. At some point, that changed, and he made an offer to buy Twitter.
“I invested in Twitter because I believe in its potential to be the platform for free speech around the world,” Musk said in an April 14 letter sent to Bret Taylor, chairman of the board. from Twitter. “I believe that freedom of expression is a societal imperative for a functioning democracy.”
Twitter’s initial response to the offer was to adopt a so-called poison pill provision, which would have created more shares of the company in order to dilute the value of Musk’s holdings.
But by the end of that month, Musk had made his 11-figure offer to buy Twitter, and the social media company backtracked, deciding that Musk’s $44 billion valuation of the company was the best price he could. its shareholders would get. On April 25, he accepted Musk’s offer.
In May, Musk said he was suspending the deal in response to what he said were issues with the number of fake accounts and spam on the site. Twitter had long said in official documents that it believed no more than 5% of accounts on its site fell into this category, raising questions about Musk’s true motives behind his apparent backpedaling.
Between the time Musk made his $54.20 per share offer and his assertion that he was suspending the deal, Twitter’s share price had fallen to $45.
Either way, Musk and Twitter couldn’t reach an agreement to settle the dispute, leading to the current standoff. Now, Twitter and Musk’s attorneys have a trial date set for October to argue the dispute in Delaware Chancery Court, the primary court in the United States for settling business cases.
Claire Cardon contributed.
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