Twitter Board said we are coming after you Elon with a lawsuit after he backs off with 44 billion dollar deal
The world’s richest man, Elon Musk, the CEO of Tesla, announced on Friday that he was cancelling his $44 billion plan to acquire Twitter, citing the social media company’s violation of numerous merger agreement clauses.
Bret Taylor, the chairman of Twitter, said on the microblogging site that the board intended to file a lawsuit to enforce the merger deal.
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
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk…,” he wrote.
Musk’s attorneys said in a document that Twitter has ignored or refused to reply to several requests for information on phoney or spam accounts on the site, which is essential to the operation of the company.
According to the complaint, Twitter “appears to have made false and misleading claims upon which Mr. Musk relied when entering into the Merger Agreement” and is in “material breach of multiple sections of that Agreement.”
Musk added that another reason he was leaving Twitter was because the company had broken its promise to “preserve substantially intact the material components of its current business organisation” by firing high-ranking executives and one-third of the talent acquisition team.
In extended trading, shares of Twitter were down 6% at $34.58. That is 36% less than the $54.20 per share Musk had agreed to pay to acquire Twitter in April.
After Musk purchased stock in the firm in early April, Twitter’s shares rose, protecting it from a severe stock market sell-off that battered rival social media companies.
But after he decided to purchase Twitter on April 25, the price quickly started to decline as investors worried Musk might back out of the deal. After the bell on Friday, Twitter’s stock price fell to its lowest level since March.
The revelation adds another chapter to the will-he-won’t-he tale that began when Musk agreed to buy Twitter in April but postponed the transaction unless the social media company demonstrated that spam bots make up fewer than 5% of its overall user base.
If Musk cannot complete the sale due to factors such as the acquisition finance falling through or regulators opposing the deal, the contract stipulates that Twitter will receive a $1 billion break-up payment from Musk. However, in the event that Musk decides to end the agreement on his own, the break-up fee would not be charged.
Due to Musk’s decision, the 16-year-old San Francisco-based business and the billionaire are expected to engage in a protracted court battle.
Wedbush analyst Daniel Ives claimed that Musk’s filing was negative news for Twitter.
He said in a letter to clients that this was “a catastrophe scenario for Twitter and its Board as the company would battle Musk in an extended legal battle to reclaim the deal and/or the breakup fee of $1 billion at the very least.”
