Elon Musk has accused Twitter of fraud, claiming the social media platform misled him about key aspects of its operation before agreeing to a $44 billion takeover, as their legal battle escalates.
The Tesla boss testified late Thursday as he fights back against Twitter’s lawsuit seeking to force him to close the deal, which he has tried to overturn.
Musk argued in his filing in a Delaware court that the number of users who can be served ads on the platform is far lower than the company figures.
“Twitter’s revelations have slowly unfolded, with Twitter frantically closing the floodgates on information in a desperate attempt to prevent parties from exposing its fraud,” the claim is quoted as saying.
In its own filing, Twitter rejected the billionaire’s argument, calling it “as implausible and counterfactual as it sounds.”
“According to Musk, he — the multi-company billionaire founder who was advised by Wall Street bankers and lawyers — was tricked by Twitter into signing a $44 billion merger deal,” Twitter said.
Last week, Musk filed his countersuit, which was finally made public on Thursday, along with a legal defense against Twitter’s claim that the billionaire is contractually bound to complete the buyout deal.
“The counterclaims are a manufactured story for litigation that flies in the face of evidence and common sense,” Twitter argued in its filing.
A five-day trial to consider Twitter’s lawsuit against Musk is scheduled for Oct. 17.
The Tesla boss had presented Twitter’s board with an offer of $54.20 per share, but then announced in July that he was ending their deal because the company had misled him about counting fake and spam accounts.
Twitter, whose share price closed at $41.06 on Thursday, stands by its estimates that less than 5% of activity on the platform is driven by software “bots” rather than humans.
Twitter told the court that Musk’s claim that the fake account rate exceeded 10% was “unfounded.”
The company also disputed Musk’s claim that it has the right to back out of the deal if Twitter’s bot count is found to be wrong, as it didn’t ask about bots when it made the takeover offer.
Twitter accuses Musk of concocting a story to get out of a merger deal it no longer found attractive.
“Twitter has complied in all respects with the merger agreement,” the company said in a filing in Chancery Court in the state of Delaware.
“Musk’s claims, based on distortion, falsification and outright deception, change nothing.”
The social media platform urged shareholders to approve the deal, setting a vote on the merger for September 13.
Billions of dollars are at stake, but so is the future of Twitter, which Musk has said should allow all legal speech — a position that has fueled fears the network could be used to incite violence.