Twitter Sues Elon Musk, Forcing Him To Honor The Merger Deal in 2022
- July 15, 2022
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Twitter Sues Elon Musk, Forcing Him To Honor The Merger Deal
Last week, Tesla CEO Elon Musk announced that he was canceling his $44 billion acquisition of Twitter, stating that Twitter had violated several terms of the merger agreement. In response, the company’s board chairman said that the board would take some legal measures to enforce the merger agreement. “Twitter’s board of directors is committed to closing the transaction at the price and terms agreed with Mr. Musk and plans to take legal action to enforce the merger agreement,” read a tweet he shared.
It has sued Elon Musk, the billionaire tech CEO. The lawsuit was filed Tuesday in Delaware Chancery Court after the head of Tesla and Space X finalized the $44 billion takeover deal. According to Twitter, Elon Musk “refuses to fulfill his obligations to its shareholders because the agreement he signed no longer serves his personal interests” after signing a binding merger agreement.
On the other hand, Elon Musk continued to cite Twitter bots along with Twitter’s lack of comprehensive information to evaluate the deal, due to its delay turned termination.
The lawsuit filed less than twenty-four hours ago is the start of a long legal battle between social media company Elon Musk, who appears to want to exit the deal now. According to a Securities and Exchange Commission (SEC) filing in April, should Elon Musk not be able to get enough debt funds to complete his $44 billion offer to acquire Company, he will be required to pay Twitter a $1 billion cancellation fee.
However, this is not a case of underfunding. Legal experts say that although the outcome of the legal battle is unpredictable, it could end up forcing Elon Musk to complete the deal, pay the $1 billion breakup fee, or reach a settlement/renegotiation of the deal. Some even add that you could end up with the billionaire completely devoid of the bargain.
According to the court filing, Company is seeking a four-day trial in September. This filing also added that Elon Musk’s behavior during the processes leading up to the takeover was “in bad faith,” and also accused Elon Musk of acting against the deal since “the market began to shift.”
In his complaint, Twitter wrote that “having made a public offer to put Twitter on the line, and after proposing and then signing a seller-friendly merger agreement, Musk appears to believe that, unlike any other party subject to a Delaware law contract, he is free to change their mind, and destroy the company.”, halt operations, destroy shareholder value, and walk away.”
“This disavowal comes after a long list of material contractual breaches by Musk that has marred its business,” Twitter added in its lawsuit.
The lawsuit also states that “since the merger agreement was signed, Musk has repeatedly underestimated Twitter and the transaction, which has created commercial risk for downward pressure on its share price.”
According to a tweet posted by Twitter Chairman Brett Taylor, the lawsuit was filed in order to “hold Elon Musk liable for his contractual obligations.” Elon Musk replied, “It’s ironic.”
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