On Friday, Elon Musk announced that he would give up the takeover of Twitter. The social network has surrounded itself with a legal team to file a complaint against the American billionaire. The title of the social network dropped 5.46%, to 34.80 dollars, around 11:05 GMT. It had lost 5.10% before the weekend
The abandonment of the takeover of Twitter
by Elon Musk goes wrong on the side of the social network. Twitter president Bret Taylor reacted by swearing to enforce the agreement.
Twitter has hired the legal team of Wachtell, Lipton, Rosen & Katz LLP to sue Elon Musk, reports Bloomberg News. The company therefore surrounds itself with big names from the bar such as Bill Savitt and Leo Strine.
Twitter intends to take legal action Start of the week, according to the outlet, citing people familiar with the matter. The case promises to be an uphill court battle.
According to the billionaire, the company would have provided incomplete or unusable data during the negotiations.
Fake accounts involved
On Friday, after the US stock market closed, the boss of Tesla and SapecX said want to put an end to the takeover of Twitter for an amount of 44 billion dollars which had already been agreed.
According to the billionaire, the company provided incomplete or unusable data during negotiations. He adds that Twitter reportedly counted suspended accounts in its user count that it knew were fake.
Elon Musk’s fame had been the subject of speculation for weeks. As soon as the American billionaire’s about-face was confirmed, the management of Twitter had declared that it wanted to take legal action.
For his part, Elon Musk called on Quinn Emanuel Urquhart & Sullivan LLP. The firm previously defended him in a 2019 defamation suit and is representing him in an ongoing lawsuit against shareholders over his failed attempt to take Tesla private in 2018.
Action in Delaware
Experts estimate that the chances of a Legal wins are strong for Twitter. However, they do not exclude that the company agrees to lower the purchase price during subsequent negotiations.
Complaint will be brought in the State of Delawarehome to more than half of America’s public companies, including Twitter.
The court hearing the case generally disapproves of attempts to withdraw from merger agreements. In 2000, Tyson Foods agreed to acquire rival IPB Corp. Shortly after the deal was struck, the meat market suffered a sharp drop, which had a financial impact on both companies. Tyson had argued that she had received misleading information about IPB’s business and was therefore no longer obligated to complete the $3.2 billion merger.
This case still serves as a basis for courts and companies to interpret a buyer’s ability to terminate a merger agreement. The judge will also have a say in whether severance pay must be paid. In the Musk-Twitter case, these costs would amount to 1 billion dollars.