The relationship between the world’s richest man and the microblogging site has been tumultuous from the start and now it’s a legal battle.
When Elon Musk, CEO of Tesla and the world’s richest man, made an offer to buy Twitter in April, he was aware that it would be a rocky road but hoped that it wouldn't be “too miserable”.
“Civilisational risk is decreased the more we can increase the trust of Twitter as a public platform so I do think this will be somewhat painful,” he had said at that time, adding that he’s “not sure that I will actually be able to acquire it”.
Three months later, he not only abruptly changed his mind about acquiring the microblogging site but has also found himself in what could turn out to be a prolonged legal battle with the social media giant.
Here’s how things got complicated:
The entrepreneur’s first step towards buying Twitter was actually earlier than his public announcement. He started buying Twitter shares without disclosing it on January 31.
That was the time Musk unofficially first declared that rules don’t apply to him. Any investor who buys 5 percent shares of a company is required to disclose it to the public in 10 days, in a regulation that is intended to protect other investors from sudden price differences in their shares.
Musk, however, waited for 21 days after his shares topped 5 percent. His shares almost reached 10 percent until his disclosure. This saved him millions in dollars as he managed to keep the price of the shares lower.
He also proceeded with public statements on his personal Twitter account regarding the site. In public polls, he asked users of the platform if they think Twitter was rigorously adhering to the principle of free speech and if its algorithm should be open source.
Twitter announced that Musk will join its board with the condition that he won’t acquire more than 14.9 percent of the shares till the end of 2024.
Musk then abruptly changed his mind about joining the company’s board on April 10. This allowed Musk to acquire more shares and tweet his mind on the website as he wished..
Four days later, the Tesla chief proposed buying the remaining shares of Twitter that he doesn’t already own, at $54.20 per share. The offer was worth more than $43 billion.
Then came the ‘poison pill’—a provision that Twitter introduced a day later to prevent Musk’s hostile takeover bid. The plan was to allow existing shareholders buy stocks at a discount in order to reduce the shares of new investors.
On April 21, Musk lined up $46.5bn in financing for the deal while saying that there is room for negotiation. Twitter finally accepted the offer for an average of $883.09 per share, leading the billionaire to sell $8.5 billion worth of his Tesla stocks.
Thanks to his billionaire friends, Musk managed to collect an additional $7 billion to finance his deal. The Tesla chief said he aimed at increasing Twitter's annual revenue to $26.4 billion from $5 billion by 2028.
He says buying Twitter has never been about money, but it sure played a role for him to be bolder about revealing his plans about the company that many found controversial.
Shortly after he reached an agreement with the company, he announced he would reinstate the Twitter account of former US president Donald Trump, calling the decision to ban him “flat out stupid”.
Then came another twist. Musk this time tweeted that the deal is on hold until spam and fake Twitter accounts represent less than 5 percent of users, while stating that he’s still committed to acquisition.
Musk was frequently tweeting and one hit a rock when he revealed that the platform's sample size for automated user checks, which he said was just 100. Twitter's legal team at this point wasn’t thrilled about this violation of the non-disclosure agreement and Musk too, wasn’t happy about being warned by the company.
The scuffle at this point turned into a battle when Musk’s lawyer’s claimed he has the right to walk away from the agreement because the company didn’t provide the information he had requested about spam and fake accounts.
Twitter fought back. "The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr Musk and plans to pursue legal action to enforce the merger agreement," Twitter board chair Bret Taylor said in a tweet.
The company, angry that Musk thinks he can “trash the company, disrupt the operations, destroy stockholder value and walk away,” files a lawsuit in Chancery Court in Delaware, to force him to complete the deal.
Musk's lawyers filed a motion opposing a trial at Delaware, saying that Twitter's "unjustifiable request to rush this $44 billion merger case to trial in just two months" should be rejected and requested to wait for a trial until early next year due to the complexity of the case.
Twitter says “it’s attempted sabotage…to run Twitter down,” said attorney William Savitt, representing Twitter.
It’s not certain if Twitter could force Musk to acquire the company but the Tesla CEO has already lost his fight to delay social media giant's lawsuit. A Delaware judge said the “delay threatens irreparable harm,” to the company and set a trial in October.