As announced, the company filed a lawsuit in the state of Delaware, according to Board Chairman Bret Taylor. The competent court can order the completion of a takeover. Twitter also expressly demands this in the 60-page lawsuit that was published by US media on Wednesday night.
Musk announced on Friday that he was withdrawing from the agreement to buy Twitter for around $44 billion. As justification, he referred to his previously unsubstantiated claims that there were significantly more fake accounts on Twitter than the company’s estimate of less than five percent. His lawyers argued, among other things, that Twitter had failed to provide Musk with the data necessary to verify these numbers. Twitter dismissed this, calling Musk’s withdrawal “invalid and unlawful.”
Twitter probably in a better legal position
A day later, Twitter’s lawyers added in the lawsuit: Musk probably believes that he can withdraw from a contract that has been concluded, denigrate the company, mess up its business and destroy shareholder values. “Musk’s behavior confirms that he wants to get out of the binding contract he’s signed and hurt Twitter in the process.”
The company asked for an expedited review of the case. US experts see Twitter in a better legal position than Musk, also based on previous court decisions. At the same time, however, they raise the question of how sensible it would be to force him to take over if he doesn’t want to. One possibility for Twitter would also be to negotiate a higher severance payment from Musk than the $1 billion provided for in the contract if the court wins.
However, some experts also raise the question of whether Musk could not simply ignore a judgment that was unfavorable to him. “You don’t put people in jail just because they don’t buy something,” Zohar Goshen, a professor at Columbia Law School, told the Wall Street Journal.
Poop emoji also made it into the lawsuit
Twitter attributes Musk’s pullout to the stock market downturn, which has shrunk both Twitter’s value and Musk’s fortune. However, the purchase agreement states that such a development is a risk that Musk must bear – and is not a reason for an exit. Twitter presents doubts about estimates of the number of fake accounts and demands for more and more data on them as an attempt to create a pretext for terminating the deal. Musk admitted that he had not read a detailed explanation from Twitter about the estimation method. Musk’s wordless tweet with a poop emoji in response to public statements by Twitter boss Parag Agrawal also made it into the lawsuit.
Twitter’s lawyers are trying to refute other allegations in the lawsuit. They pointed out that Twitter had secured the right in the agreement to terminate employees without consulting Musk. He had argued that the separation of two top managers, among other things, violated the requirement to continue the company’s business as usual. In addition, Twitter emphasized that failure of the financing in the contract is not intended as a reason for canceling the deal. In other words, Musk’s problem is how to raise the necessary money.
By far the richest man in the world
The 51-year-old is by far the richest person in the world with an estimated fortune of 214 billion dollars. However, his wealth consists mainly of shares in the electric car manufacturer Tesla, which he manages. His ability to raise money through sales is limited. Musk dropped the original plan to collateralize part of the loans with Tesla shares as the price has fallen by more than a quarter since the Twitter deal.
Musk had planned to buy Twitter himself in the spring. He repeatedly emphasized that he is not concerned with money, but above all with freedom of speech on the platform. Musk said he would let former US President Donald Trump, who was banned from Twitter, back on the platform.
The board of directors of the online service initially blocked Musk’s bid of $54.20 per share, but then accepted it. Next, in the coming months, shareholders should vote to sell their stake to Musk. Musk’s price would be a good deal for many: the stock closed at a good $34 on Tuesday after gaining more than four percent. In early premarket trading on Wednesday, the price rose 0.76 percent to $34.32.
Source: Nachrichten
