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Now a lengthy court battle will start to determine whether Twitter can force Musk to complete the deal, or at least make him pay the $1 billion set out as a breakup fee in the original agreement. The outcome is unpredictable.
Twitter Inc (NYSE: TWTR) has filed a suit against the billionaire Elon Musk over his escape from the $44 acquisition deal. As the company has said, after entering a binding merger agreement, Musk now “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.” In turn, Musk abandoned his plan to acquire the social network company stating that Twitter failed to provide accurate information on fake accounts on its platform.
The lawsuit filed in the Delaware Court of Chancery on Tuesday reads:
“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, [Mr] 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.”
Besides, Twitter has asked a Delaware court to order the billionaire to complete the deal at the agreed $54.20 per Twitter share. The company has accused Musk of “a long list” of violations that “have cast a pall over Twitter and its business.”
As Twitter Chairman Bret Taylor, tweeted, he wants to hold Musk “accountable to his contractual obligations.”
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
In response, Musk tweeted:
Oh the irony lol
— Elon Musk (@elonmusk) July 12, 2022
Now a lengthy court battle will start to determine whether Twitter can force Musk to complete the deal, or at least make him pay the $1 billion set out as a breakup fee in the original agreement. The outcome is unpredictable. Musk could be forced to either close the deal or pay a $1 billion breakup fee. Other scenarios include a settlement and renegotiation of the purchase price. In addition, the is also a possibility for Musk walking away without paying anything.
Twitter is seeking a four-day trial in September.
How the Story Began
The saga involving Twitter and Elon Musk started back in April when the billionaire announced his intention to acquire the social media company for as much as $44 billion. Initially, the plan was to take the company private in order to preserve and promote free speech. As Musk explained, having total control of Twitter’s affairs and operations is important to creating a level playing field for right- and left-wing users. Further, within three years, Musk was planning to return Twitter back to public ownership.
The Board supported Musk’s idea, unanimously recommending its shareholders vote for the agreement. However, recently, the billionaire decided to walk away from his commitment. As Musk explained, there were three conditions Twitter had to ensure in order to get the deal closed. In particular, his main concern was the bot and spam account count that must be ascertained. According to Musk, the data he had requested never came. Therefore, he decided to back out of the deal. Now, Twitter and Musk will have to find out who is right and who is wrong in court.