In a recent filing, lawyers for Elon Musk claimed that Twitter misrepresented information about the company and its key metrics, and distorted its value in order to cause the billionaire to agree to buy the social media platform at an inflated price.
The allegations were detailed in a countersuit made public Thursday. The filing alleges that Twitter made statements in its Securities and Exchange Commission disclosures that were far from true and contain numerous misrepresentations or omissions that distort Twitter's value. Twitter said its disclosures to the SEC are accurate and that the company misrepresented nothing. The claim that Musk was hoodwinked into signing the merger is as implausible and contrary to reality as it sounds, and it is alleged that Musk is making excuses to escape the agreement.
Musk sued Twitter last month after Musk tried to back out of a deal to buy the company for $54.20 per share, or $44 billion, and take it private. Since Musk first made his bid for Twitter in April, the social media platform's share price has fallen to $41, leading some to speculate that Musk is simply looking for a lower price for the company.
Musk has accused Twitter of withholding data about the volume of fake and spam accounts on its site, arguing that the company has been misleading investors about how many active users it truly has. The countersuit focuses on those accounts and active user numbers.
In the past, Twitter has responded to those claims by saying it has given Musk all the information he asked for.
Now, Twitter is going to court to force Musk to follow through on the sale.
Musk's bid for the company has taken several twists and turns in the last four months, and is one of the many twists and turns that Musk has taken in the last 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.
Musk was going to take a seat on Twitter's board of directors in connection with his stake. That changed at some point, and he put together a bid to buy Twitter outright.
Musk said in an April 14 letter sent to Bret Taylor, Chair of Twitter's board, that I invested in Twitter because I believe in its potential to be the platform for free speech around the world. The initial reaction to the bid was to adopt a so-called poison pill provision that would have created more shares of the company in order to dilute the value of Musk's holdings.
By the end of the month, Musk had made his 11 figure offer to buy Twitter, and the social media company reversed course, deciding Musk's $44 billion valuation of the company was the best price it would get its shareholders. On April 25, it accepted Musk's bid.
By May, Musk said that he was putting the deal on hold due to issues with how many fake and spam accounts were on the site. In official filings, Twitter had stated that no more than 5% of the accounts on its site fell into that category, raising questions about Musk's motivations behind his apparent backpedaling.
Between the time Musk made his offer for $54.20 per share and his assertion that he was pausing the deal, Twitter's share price had fallen to as low as $45.
The dispute was brought up by Musk and Twitter, which could not come to an agreement on how to deal with it. The lawyers for Twitter and Musk have set a trial date in October to argue the dispute in Delaware Chancery Court, the main jurisdiction in the U.S. for settling business matters.