Twitter sues Elon Musk, in Delaware's Court of Chancery, to force him to complete his $44B acquisition of the company, as he “refuses to honor his obligations”

The question of whether Elon Musk must buy Twitter, as he agreed to do in April, is headed to a court in Delaware.

New York Times 2022-07-13

Context & Ripple Effects

Twitter is following through on Bret Taylor's stated plan to enforce the agreed deal terms rather than renegotiate them. A shareholder had already alleged that Musk's conduct was designed to create doubt around the transaction, placing the suit in an escalating dispute over closing the acquisition.

The Delaware case became the central venue for resolving the deal: the court later set an October trial over the failed takeover, while Musk answered with a countersuit and sought to add claims tied to Peiter Zatko.

First-order effects

Twitter and Musk move from a contested acquisition agreement into Court of Chancery litigation, with Twitter seeking an order requiring Musk to close at the agreed $44 billion price.
Twitter's board commits the company to a legal enforcement path, while Musk must defend his refusal to complete the transaction in Delaware.

Second-order effects

Musk's subsequent countersuit turns the merger fight into competing claims, expanding the issues the Delaware court must weigh rather than leaving Twitter's enforcement claim uncontested.
The court's later refusal to delay the October trial concentrates pressure on both parties to prepare for a rapid merits hearing, including Zatko-related claims allowed into the case.

Third-order effects

The dispute tests how firmly a signed acquisition agreement can bind a buyer when the target's board seeks specific enforcement in Delaware, making deal certainty depend heavily on the Court of Chancery's willingness to impose a closing remedy.
For public-company boards, the sequence—from an enforcement pledge to an accelerated trial—points toward more litigation-centered handling of contested takeovers rather than informal repricing once a buyer attempts to exit.

The trend: Contested takeovers are increasingly being resolved through expedited Delaware merger litigation that determines whether contractual closing commitments are enforceable.

Discussion

@btaylor Bret Taylor on x
Twitter has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable to his contractual obligations.
@rmac18 @rmac18 on x
Twitter's lawyers: This man is a complete joke! Also Twitter's lawyers: And that's why he should own Twitter.
@kateconger Kate Conger on x
Here's the full lawsuit: https://www.documentcloud.org/ ...
@caseynewton Casey Newton on x
Twitter sues Elon Musk, calling his attempts to weasel out of the deal “a model of hypocrisy” and “a model of bad faith.” https://t.co/iWpLK9h7Wf https://t.co/DJ0xQjQYyC
@matt_levine Matt Levine on x
obviously the poop emoji made it into the complaint https://twitter.com/...
@danprimack Dan Primack on x
Big ouch for A16Z, Sequoia, Ellison, etc: Musk's investors, all sophisticated market participants, made these commitments in the face of Musk's public statements regarding spam accounts, and knowing he had forsworn diligence.
@kylesgibson @kylesgibson on x
What is Musk's team doing with the firehose data? Seems out of scope for the mdau / spam issue https://twitter.com/...
@dkthomp Derek Thompson on x
Big picture, the Twitter suit really is one of the strangest documents I've ever read. The company is powerfully demonstrating the profound unseriousness of one person, and trying to force a person to buy them against his will. And it's the same person!!!!!!
@davidlat David Lat on x
Twitter's lead lawyer is Bill Savitt, co-chair of litigation at Wachtell Lipton and a top Delaware Chancery litigator. Brad Sorrels of Wilson Sonsini, another Delaware Chancery veteran, is also on the complaint. Local counsel is Potter Anderson & Corroon. https://twitter.com/...
@rmfifthcircuit Raffi Melkonian on x
OK, here we are! Very first thing, confirming that indeed, Twitter is asking that the Court force Musk to buy Twitter at the contract price. Again, this case is *NOT* about a $1 billion termination fee. 1/ https://twitter.com/... https://twitter.com/...
@mikeisaac Rat King on x
full internal memo from Twitter ceo Parag Agrawal to employees this afternoon: (in response to an earlier widely sent email from general counsel Sean Edgett) https://twitter.com/...
@dkthomp Derek Thompson on x
The Twitter suit is blistering and just ... obviously true? You can't buy a distressed property and brag to neighbors about how you're going to fix the horrible termite problem ... and then cry after signing bc you're astonished to find termites in the walk-through. https://twitt…
@mmasnick Mike Masnick on x
I do still think it would be surprising if the court orders Musk to fully buy Twitter, but it's not impossible at this point and honestly Musk might be lucky if he can get out of this for just a few billion.
@sifill_ Sherrilyn Ifill on x
Why @Twitter? Did you hear the Twitter employee witness at the #January6thHearings today describing how your platform was used to foment a violent mob attack on our govt by the man Musk wants to invite back on? What are your full fiduciary responsibilities? https://twitter.com/..…
@silvermanjacob Jacob Silverman on x
Musk's data team got access to the Twitter firehouse and ran 100,000 queries in two weeks. Seems like a lot. https://twitter.com/...
@alexeheath Alex Heath on x
As it promised, Twitter has sued Elon Musk for backing out of the deal in its incorporated state of Delaware. Spicy line from the filing: “Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement...
@sarahfrier Sarah Frier on x
“Rather than bear the cost of the market downturn.. Musk wants to shift it to Twitter's stockholders” https://t.co/cCwQoR24rh
@sarafischer Sara Fischer on x
Quick takeaways from @twitter lawsuit: -Alleges Musk strategy “a model of bad faith” & “model of hypocrisy” -Alleges he “violated his obligations to treat requests for consent reasonably” -Says his disparaging public comments created “business risk” & “downward pressure” on stock…
@thedextriarchy Adi Robertson on x
The only silver lining of this case is the prospect of lawyers dragging out tortuously detailed explanations for Elon's meme posts in a courtroom https://www.theverge.com/...
@mikeisaac Rat King on x
this is no dry legal brief almost as if it was meant to be tweeted and as a friend noted, aimed at winning both in the Court of Public Opinion as well as Delaware Chancery https://twitter.com/...
@sarahfrier Sarah Frier on x
As expected, Twitter is asking for “specific performance” — for Elon Musk to go through with his contractual agreement to buy Twitter. https://t.co/b8yA9grEkn
@bobbyallyn Bobby Allyn on x
Suit on bots: Elon's “information requests were designed to try to tank the deal. Musk's increasingly outlandish requests reflect not a genuine examination of Twitter's processes but a litigation-driven campaign to try to create a record of non-cooperation on Twitter's part.”
@danahull @danahull on x
TWITTER not mincing words: “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.”
@lex_node @lex_node on x
this is such a good complaint by Twitter's Delaware lawyers. I was a public-company M&A atty at Weil Gotshal for 7.5 years & have a good sense of how these deals work...We'll need to see all Musk's evidence of Twitter's alleged breaches, but I think Musk might finally ‘lose’ .. h…
@davidlaz David Lazarus on x
Imagine the good that could otherwise be done with all the legal fees for this mess https://twitter.com/...
@michaeldweiss Michael Weiss on x
I claim no special knowledge or expertise or authority on tech issues. If anything, I'm badly in the red on these things. But I had a gut feeling this whole thing was a massive grift designed to drum up PR. All I've learned is Musk has a baseball team worth of kids... https://twi…
@taylorlorenz Taylor Lorenz on x
“For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke.” https://www.washingtonpost.com/ ... https://twitter.com/...
@kantrowitz Alex Kantrowitz on x
We will force this man unfit to run the company to buy the company for the good of the company https://twitter.com/...
@plainsite @plainsite on x
$TWTR just did Elon Musk a huge favor by filing today. Normally, Musk runs damage control by scheduling events ("launches" of products but perhaps also rockets) when bad news is scheduled to run. Today, Wachtell and WSGR (which also works for $TSLA) gave him cover for free.
@akilahobviously Akilah Hughes on x
I'll never forget the strange Muskrats screaming about how this was gonna be some kind of reckoning and all that's happened is Elon Musk losing money and continuing to lose money. https://twitter.com/...
@martinsfp @martinsfp on x
They're not wrong here, but if they're doing this out of fiduciary duty, then fiduciary duty is deeply flawed. There's no way any of this anything but incredibly stupid. Make this all go away as soon as possible so staff and the company can have some certainty. https://t.co/C8SUy…
@armandondk Armando on x
That's a strong complaint. They seek a sole remedy - specific performance. Obviously other remedies could emerge but for now, they seek one. https://twitter.com/...
@pierce David Pierce on x
If you've ever wanted a reason to believe capitalism is broken, Twitter saying “Elon Musk is a joke and a jerk and should also be forced to own our company” seems like a good place to start? https://www.theverge.com/...
@ephraimgopin Ephraim Gopin on x
@Kantrowitz Please then explain Twitter's rationale in filing this case. Wouldn't it make more sense to enforce billion dollar penalty, move on & hopefully stabilize the stock price? This case will make stock more volatile and cause them to lose even more. (And yes, aware of purc…
@caseynewton Casey Newton on x
Wow, just look how hard Musk has worked to understand Twitter's process for measuring spam https://twitter.com/...
@reckless Nilay Patel on x
Twitter calling him “a model of hypocrisy” in a lawsuit to get him to buy the company... is just all-around hilarious and keeping in complete character with Twitter, actually https://www.theverge.com/...
@robdenbleyker Rob DenBleyker on x
watch the supreme court rule that contracts are no longer real https://twitter.com/...
@mshannahmurphy Hannah Murphy on x
Interesting nugget from the Twitter lawsuit: Twitter accuses Musk of “delaying and stymying key operational decisions”, including by not giving the go ahead for the company to launch 2 employee retention programs (Per the agreement, Musk has to sign off on decisions like this) ht…
@africatechie Rebecca Enonchong on x
This lawsuit will be fascinating to watch. Many will start to understand why so many businesses (even African startups) register in Delaware. Court of Chancery is a “court of equity” that weighs more than law in rendering decisions and has deep understanding of business. https://…
@pkafka Peter Kafka on x
Reminder: The Twitter complaint is just Twitter's version of events. The whole point is to make Twitter look good and Elon look not good. Obviously Elon will have a counter worthy of his super genius. If you thought his tweets were impressive... just wait! https://twitter.com/...
@danprimack Dan Primack on x
“Twitter also negotiated for itself a right to hire and fire employees at all levels, including executives, without having to seek Musk's consent.”
@moorehn Heidi N. Moore on x
Hmm! When Twitter gave Elon Musk its firehouse data, he and his team ran *search* queries, like any user would search terms, it sounds like. He pretended this was about bots. But what if he was searching for something else in the firehose data? https://twitter.com/...
@kurtwagner8 Kurt Wagner on x
Sounds like Twitter's legal team is hoping to get this to trial as early as mid-September and believes the trial can be done in just 4 days (!), according to a source. Ambitious! regardless, they clearly want to move fast. https://twitter.com/...
@sarahfrier Sarah Frier on x
In this lawsuit, Twitter finds a lot of ways to call Musk a liar. Among vocabulary used: “pretending,” “conjure,” “asserted, falsely,” “bad faith.”
@moorehn Heidi N. Moore on x
What's funny about Twitter's lawsuit against El*n is that they're NOT looking for the $1 bn breakup fee. Weirdly, Twitter's argument is that Elon has done so much damage to the company that he should acquire it. Essentially, “you break it, you buy it.” https://www.documentcloud.o…
@tedfrank @tedfrank on x
Not sure why it's funny? Twitter has a duty to its shareholders. Specific performance is worth $16 billion to the shareholders compared to a breakup fee, and the contract expressly provides that as a remedy. No litigator is surprised by this. https://twitter.com/...
@mikeisaac Rat King on x
twitter ceo parag agrawal just sent out an internal memo basically aimed at calming the troops. “We took the time to defend our company, our people and our stockholders. We plan to hold the buyer fully accountable to fulfill his contractual obligations.”

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