Even If Musk Calls Off His $44 Billion Twitter Agreement, The Company Will Still Sue Elon In An Elongated Court Battle To Recoup The Deal
Twitter says that we will take the matter up to the court. The social media company says we are confident we will prevail in the Delaware Court of Chancery. Furthermore, the chairman of Twitter’s board of directors, Bret Taylor tweeted Friday that the company is committed to closing the transaction at the said price and terms agreed upon with Musk, and plans to pursue legal action to enforce the merger agreement.
Here’s the filed lawsuit document!
The short version of this fight is that the social media giant revealed that only 5% of the accounts are not real people. Elon, the tech mogul thinks that the percentage may be a lot higher. In response to this, the Tesla boss boldly claimed in a letter to the company that he needs to verify these claims.
Space X chief claims that Twitter misled him about the number of fake accounts on the platform. In reply to this, Twitter has insisted to Musk and the public that it has bots under control and that it intends to enforce the merger agreement.
19.42% of active Twitter accounts are fake or spam
Even if Musk is right factually, and if every statement he omits is true, that isn’t a basis for canceling the merger agreement. The reason that Anna Lipton, a professor of Business Law at Tulane university gives for this is that merger agreements are drafted to avoid Musk getting away with the deal.
Bret Taylor highlighted that taking Musk to court is something the agreement does allow. It says we will sue Elon to complete his $44 billion acquisition. When Twitter and Musk first inked their 44 billion USD, both sides agreed to pay a $1 billion termination fee in case either one backtracks for a specific reason.
Since Elon has concerns over bots and that he thinks Twitter has breached the legal terms pertaining to bots, it is clear he’s canceling the Twitter deal without paying a $1 billion breakup fee. The concerning thing is that the breakup fee itself is not mentioned in the filing with the SEC, making it a clear ground for Elon to backtrack on the deal.
On the flip side of the argument, Wall Street analysts say that Twitter’s board and management should be open to accepting a lower price to avoid a messy legal battle. A 15 to 20% drop in the lower price is going to get Elon Musk engaged again, or he’ll continue to play the bot card. However, these are opinions that might go wrong.
In the series of these events, Twitter told its sta to obtain and refrain from tweeting, slacking, or sharing any comment depicting anything about the merger agreement. Twitter also said to hold on in this difficult time and appreciates their patience and commitment.
