Elon Musk, Twitter and a potential legal battle
Elon Musk may be gearing up for the next chapter in his Twitter takeover journey: the courts.
A $44 billion deal is achieved in April between Mr Musk and Twitter, and the two sides worked to finalize the deal. Mr. Musk has requested information on the number of Twitter accounts that are bots and Twitter has provided Mr. Musk with access to “Hydrant,” Or the tweet. It went on to share additional information with him.
On Thursday, washington articles reported that the deal was in jeopardy and that Mr Musk’s team “expects potentially drastic action.” Statement of the article, cannot be confirmed by DealBook newslettersurprised Twitter and its advisers, as they don’t see the deal as more jeopardized than at any other time in recent months.
Mr Musk did not respond to a request for comment. Twitter reiterated that it intends to “close the transaction and enforce the merger agreement at the agreed price and terms.”
There are a lot of “drastic” actions Mr Musk could take, but regarding the deal, there are two obvious possibilities: He could send a letter to Twitter saying he’s terminating the deal, and yes can sue Twitter. Those two actions most likely, but not necessarily, occur simultaneously.
There are no clear grounds for Mr. Musk to try to circumvent the deal, because Twitter has publicly revealed that about 5% of its users are bots since it went public. But he may try to claim that the disclosure is intentionally misleading, a very high standard to legally meet.
In that case, Twitter may object. Twitter truly believes the deal is on its side and it will be an uphill battle for Musk. Agreement has a “specific performance terms” This gives the company the right to sue him and force him to close the deal as long as the debt he has taken on remains intact. And even if that 5% estimate is skewed, Twitter warns in its regulatory filing that the number is an estimate and that it “could be higher than we currently estimate.” The bar to use that as a basis for exiting a deal is very high.
One case can be heard in Delaware, where Twitter has been registered. Twitter will almost certainly be looking for an emergency, given the size of the deal. One judge could be Prime Minister Kathaleen St. J. McCormick, who is also supervising Orlando Police Retirement Fund lawsuit over settlement.
The stakes are very high. The most valuable part of Twitter right now is its acquisition deal with Musk. Its shares have fallen about 24% since April and are trading well below the price agreed with Mr. Musk. Shares of Twitter fell 4% in pre-market trading on Friday.
Twitter is under pressure over its ad business, has frozen hiring and lay off some employees. Accepting less than the price it initially negotiated with Musk could expose Twitter to shareholder lawsuits. So while litigation can be expensive, losing the case can be even worse.