The Twitter president said the company plans to take legal action after Elon Musk notified the company’s board of directors that he will be withdrawing from a $ 44 billion merger deal.
Brett Taylor, chairman of the board of Twitter, wrote that the social media platform is “committed to closing the transaction at the price and terms agreed with Musk and plans to take legal action to enforce the merger agreement. “. We are confident that we will prevail before the Delaware Court of Chancellery. “
On Friday, Musk’s lawyers sent a letter to the SEC accusing Twitter of materially violating the settlement agreement. They wrote that the company, after repeated requests for data on their accounts, “has not provided or refused to provide this information.”
Their attorneys wrote that “to the extent that Twitter has underestimated the number of fake or spam accounts on its platform, this could constitute a material adverse effect on the Company under Section 7.2 (b) (i) of the merger agreement. . Mr. Musk will also review the Company’s recent financial performance and revised outlook and assess whether the Company’s declining economic and financial outlook is adversely affecting the Company, giving Mr. Musk a separate and distinct basis for terminating the agreement. of fusion.
Musk’s move to close the deal is not unexpected. He closed the deal in late April for $ 44 billion, or $ 54.20 per share, before markets collapsed. Twitter is currently trading for around $ 34. Musk said in mid-May that the deal was “suspended,” citing a lack of clarity about the number of fake bots, bots, or accounts. He kept beating on that drum and reportedly yesterday was finally about to back off.
Twitter insists that Tesla’s founding billionaire has no legal right to cancel the deal without good reason (and disagrees that the spam account information is one), even if it is willing to pay a billion dollar commission.
Twitter claims to have provided Musk with the requested information.
Musk has vowed to make major changes to Twitter, nullifying the decision to permanently suspend Donald Trump’s account after the January 6, 2021 attack on Capitol Hill. But his vision for the company hasn’t crystallized.
“This is a dire scenario for Twitter,” said Wedbush analyst Dan Ives. “The company is now fighting Musk in a lengthy legal battle to recover at least $ 1 billion in liquidation and / or dissolution fees.” He predicted that Twitter shares will likely trade in the $ 25- $ 30 range when they open on Monday.
“This series has seen a lot of twists and turns and now Twitter is finally retiring,” he said. “It has always been an obstacle to follow Twitter for Musk with a $ 44 billion valuation and it never made much sense on the street, now it ends up being (for now) the Twilight Zone, ending up behind the Twitter board against the wall and so on much more. . The road revolves around what follows. “
Negotiating a cheaper deal for Musk may be the most likely outcome. Even though Twitter has a strong legal hand, litigation is expensive.
Jill Goldsmith contributed to this report
Source: Deadline
Elizabeth Cabrera is an author and journalist who writes for The Fashion Vibes. With a talent for staying up-to-date on the latest news and trends, Elizabeth is dedicated to delivering informative and engaging articles that keep readers informed on the latest developments.
