Twitter vows legal fight after Elon Musk pulls out of US$44 billion deal

SAN FRANCISCO (REUTERS) – Mr. Elon Musk, CEO of Tesla and the world’s richest person, said Friday (July 8) that he was ending his US$44 billion ($61.6 billion) deal. to buy Twitter because the social media company breached several provisions of the merger agreement.

Twitter chairman Mr. Bret Taylor said on the microblogging platform that the board plans to take legal action to enforce the merger agreement.

“Twitter’s Board of Directors is committed to completing the transaction at the price and terms agreed to with Mr. Musk…” he wrote.

In a filing, lawyers for Mr. Musk said Twitter failed or refused to respond to multiple requests for information about fake accounts or spam on the platform, which is fundamental to the company’s business performance. the company.

“Twitter is in material breach of several provisions of this agreement, appears to have made false and misleading statements upon which Mr. Musk relied in entering into the merger agreement,” the filing states.

Mr. Musk also said he was walking away because Twitter had terminated senior executives and a third of the talent acquisition team, violating Twitter’s obligation to “preserve material components of its organization substantially intact.” current business”.

Legal battle

Mr Musk’s decision will likely lead to a lengthy legal battle between the billionaire and the 16-year-old San Francisco-based company.

Contested mergers and acquisitions that land in Delaware courts most often result in the companies renegotiating deals or the acquirer paying the target a settlement to walk away, rather than a judge ordering a transaction to be concluded. Indeed, target companies are often eager to resolve the uncertainty surrounding their future and move forward.

Twitter, however, hopes that the legal proceedings will begin in a few weeks and be resolved in a few months, according to a person familiar with the matter.

There are many precedents for a renegotiation of the agreement.

Several companies revised the prices of agreed acquisitions when the Covid-19 pandemic broke out in 2020 and caused a global economic shock.

In one case, French retailer LVMH threatened to back out of a deal with Tiffany & Co. The US jewelry retailer agreed to drop the acquisition price from $425 million to $15.8 billion.

“I would say that Twitter is in a good position legally to say that it has provided it with all the necessary information and that is a pretext to look for any excuse to withdraw from the agreement,” said Ms. Ann Lipton, Dean associated with faculty research. at Tulane Law School.

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