Elon Musk could be forced by a US court to take over Twitter for $44 billion, according to legal experts. pull the plug on the transaction.
Tesla’s chief executive said on Twitter on Friday that he was canceling the deal, citing concerns about its number. spam accounts on a social media platform.
Twitter Chairman Bret Taylor responded by tweeting that the company intends to “take legal steps to implement the merger agreement.”
Twitter’s Board of Directors is committed to closing the transaction on the price and terms agreed upon with Mr. Musk plans to take 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
On Sunday night, Bloomberg reported that Twitter had assembled a legal team to sue Musk.
Twitter expects to file a lawsuit on Monday in the U.S. state of Delaware, which has jurisdiction over the contract, one of the lawyers said.
“They will probably seek a declaratory judgment that they have not breached the contract. They will also ask the court to order Musk to specifically fulfill his obligations under the contract,” said Boston College Law School Associate Professor Brian Quinn.
under the terms of the contract the company could ask the judge for “special performance,” which would force Musk to buy the company for $54.20 a share. agreed in April. Alternatively, the company could seek a $1 billion break fee from Musk for walking away from the deal in violation of the contract.
Quinn said Musk’s arguments would likely fail in court. In Friday’s letter, Musk made three broad arguments: Twitter violated the agreement by not providing enough information about spam accounts; that Twitter misrepresented the number of spam accounts in its disclosures to the US financial watchdog; and said the company breached the contract by not consulting Musk when it recently fired senior employees.
Quinn said requests for information about Musk’s spam accounts were “not reasonable” and would not be entertained by a court. “He cannot use unreasonable requests for information to create a pretext for alleging wrongdoing,” he said.
John Coffey, a law professor at Columbia University, said: “Musk has a very weak legal basis. It seems that Twitter has given him access to almost everything to satisfy the desire to know the percentage of bots among its users.”
Carl Tobias, chairman of the Williams School of Law at the University of Richmond, said: “Musk’s appeal does not give him a strong legal basis to walk away from the contract. His attorney has only made allegations and arguments about Musk’s position, and the judges will have to decide whether Musk’s evidence is persuasive enough to support the termination of the deal.
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However, Tobias added that both parties may be willing to settle rather than end up in a situation where Musk is required to buy a company he no longer wants. Analysts have warned that the protracted legal battle could further damage Twitter’s stock price and employee morale. The agreement with Musk would draw the line under this case.
“Most similar disputes usually end in settlements that allow plaintiffs and defendants to save face,” Tobias said.
Analysts also speculate that Musk could use a legal battle to seek a lower price for Twitter, although investors are considering legal action if the deal fails to reach $54.20 a share and they file a lawsuit over the difference between the sale price and the sale price. is expected. current stock price. Twitter is currently trading at $36.81 per share.
“I doubt the court will rule before a settlement, and Twitter’s daily price will give you an idea of what Musk’s side will hope to pay,” Coffee said.
