Elon Musk announced that he would abandon his tumultuous $44 billion offer to buy Twitter after the company failed to provide enough information about the number of fake accounts. Twitter immediately fired back, saying it would sue the Tesla CEO to uphold the deal. The likely unraveling of the acquisition was just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms, and it may portend a titanic legal battle ahead.
Musk Notification To Twitter About Termination
In a letter to Twitter’s Chief Legal Officer Vijaya Gadde filed with the Securities and Exchange Commission, Musk notified the social media company that he would terminate the $44 billion acquisition deal he made in late April.
Why Is Musk Backing Out Of The Deal?
Musk’s lawyers argue that the billionaire is backing out of the agreement because “Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect.”
In other words, Musk thinks that the amount of fake accounts on Twitter is greater than 5%, which Twitter claimed. And Musk also complained that Twitter has failed to share enough data about the accounts with him.
Twitter Response To Notification Of Termination
In response to the notification, the chair of Twitter’s board, Bret Taylor, tweeted that the board is “committed to closing the transaction on the price and terms agreed upon” with Musk and “plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.”
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. We are confident we will prevail in the Delaware Court of Chancery.— Bret Taylor (@btaylor) July 8, 2022
Twitter has retained a prominent New York law firm, ‘Wachtell, Lipton, Rosen & Katz LLP’ which specializes in merger and acquisition law, to handle an anticipated lawsuit against Musk.
What Do The Experts Have To Say About This?
Jesse Fried, a Harvard Law School professor, told that Musk could not “simply walk away from the deal” and is probably trying to lower the price of the acquisition.
“He is bound to buy Twitter if he has adequate financing, as it seems he does. There are narrow outs,” Fried said. “Given the contract and Twitter’s post-signing conduct, Musk is highly unlikely to get a Delaware court to give him a ‘get-out-of-merger free card.’ He has presumably been told that by his lawyers.”