Last week, Tesla’s CEO Elon Musk announced that he was terminating his acquisition of Twitter for $44 billion citing that Twitter had breached various provisions of the merger agreement. In response, the company’s board chairman said that the board will be embarking on some legal actions to enforce the merger agreement. “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,” a tweet he shared reads.
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 filed a suit against billionaire tech CEO Elon Musk. The suit was filed on Tuesday in the Delaware Court of Chancery after the Tesla and Space X boss terminated his $44 billion takeover deal. According to Twitter, Elon Musk is refusing “to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests” after entering a binding merger agreement.
Elon Musk, on the other hand, has continued to cite Twitter bots alongside the absence of ample information from Twitter to evaluate the deal, for the reason for his delay turned termination.
The lawsuit which was filed less than twenty-four hours ago is the onset of what could be a long legal battle between social media company Twitter and Elon Musk who seems to only want out of the agreement now. According to an April SEC filing, in a situation where Elon Musk is unable to secure enough debt funding to complete his $44 billion bid to acquire Twitter, he’d be required to pay Twitter a termination fee of $1 billion. This, however, isn’t a case of lack of funding. Legal experts say that while the outcome of the legal battle is unpredictable, it could either end up with Elon Musk being forced to complete the deal, pay the $1 billion breakup fee, or a settlement/renegotiation of the deal could be reached. Some even add that it may end up with the billionaire walking completely free from the deal.
According to its court filing, Twitter is seeking a four-day trial in September. This filing also added that Elon Musk’s conduct during the processes leading to the takeover was in “bad faith”, and also accused Elon Musk of acting against the deal since “the market started turning.”
In its complaint, Twitter wrote that “Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
“This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business,” Twitter added in its suit which claims that Elon Musk’s reasons for terminations are “pretexts.”
The suit also claimed that “Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price.”
According to a tweet shared by Twitter board’s chairman Bret Taylor, the suit was filed to “hold Elon Musk accountable to his contractual obligations.” “Oh, the irony lol,” Elon Musk responded.
Twitter has filed a lawsuit in the Delaware Court of Chancery to hold Elon Musk accountable to his contractual obligations.
— Bret Taylor (@btaylor) July 12, 2022
Oh the irony lol
— Elon Musk (@elonmusk) July 12, 2022