“The Twitter Board is committed to closing the transaction on the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger deal,” Twitter chairman of the board Bret Taylor said in a tweet on Friday. the company it plans to pursue the deal with. “We are confident we will prevail in the Delaware Chancery Court.”
Twitter shares were down nearly 6% in after-hours trading on Friday following the news, after closing the day down 5%. Tesla stock gained more than 1% in after-hours trading.
Still, Musk’s lawyer wrote in a letter Friday that he claimed Twitter “did not comply with its contractual obligations” to provide Musk with sufficient data, and said Twitter “appeared to have made false and misleading statements that Mr. deal.
“For nearly two months, Mr. Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on the Twitter platform,'” the Friday letter said. necessary for it.”
He continues: “Twitter failed or refused to provide this information. Twitter sometimes ignored Mr. Musk’s requests, sometimes refused for seemingly unfair reasons, and sometimes claimed to comply with Mr. Musk by giving incomplete or unavailable information.”
Twitter has repeatedly said it shared information in collaboration with Musk to close the deal on originally agreed terms.
Twitter’s stock is trading at around $36, down nearly 30% since the day Musk and Twitter announced the buyout, well below the $54.20 per share Musk has offered, which means the deal is done at the agreed-upon price among investors. It shows deep suspicion. Analysts said the declining value may also be among the reasons why Musk is no longer interested in the deal.
what can happen next
Accusing Twitter of materially violating the merger agreement, Musk seems to be making the argument that he shouldn’t expect the $1 billion specified in the terms of the deal as a breakup fee if the acquisition fails. Carl Tobias is a professor of law at the University of Richmond.
“The way these things usually work is that if there’s a billion-dollar breakup fee and you’re the one trying to get it, then that’s enforced against you,” Tobias said, “of some kind of material breach or some kind of For example, suing the court that Twitter didn’t do the deal well. A compelling reason can be presented.”
Musk’s lawyer claimed in Friday’s letter that Musk had requested but not received information such as the number of daily monetizable daily active users for the previous eight quarters. that spam and fake accounts represent less than 5% of the monetizable daily user base. Twitter said it relied on public and private information like ISP numbers and geographic data to count bots on the platform.
Friday’s letter alleges that, despite signing a binding purchase agreement, Musk “fully negotiated access and information rights within the Merger Agreement so that Twitter can review data and information important to its business before financing and completing the transaction.” .
Brian Quinn, a law professor at Boston College, said he would ask the court for two things in Twitter’s case against Musk. Twitter is expected to seek a ruling that it did not violate its contract with Musk, and will likely seek a judicial decision requiring Musk to complete the purchase, he said.
In assessing Musk’s allegations, Quinn considered the court likely to consider the information Twitter has provided thus far and whether Musk’s requests for further clarification were reasonable and necessary to complete the settlement – for example, whether the information Musk requested was necessary to obtain government regulations. added to his credit. endorsements or funding commitments.
Quinn said that even if any lawsuits are pending, the two sides will likely continue to talk and the situation can be resolved through a renegotiated sale price. Citing a recent deal involving luxury brands Luis Vuitton and Tiffany that went to court but was eventually finalized at a lower price, he said this type of settlement is common in merger disputes.
Quinn added that Musk’s claim that he needed more information was “a difficult argument to make.” “A judge in Delaware will be quite familiar with how these processes work and what is normal and what is not.”
