Twitter is likely to file a claim against Elon Musk, who’s begun having second thoughts about his decision to purchase the social media platform for an estimated $44 billion.
Twitter has threated to launch a lawsuit against Elon Musk after the Tesla C.E.O. and billionaire sent an email to the social media company’s board of directors saying he no longer wishes to acquire Twitter.
As LegalReader.com has reported before, Musk publicly offered to buy Twitter for an estimated $44 billion.
However, Musk now appears to be having second thoughts.
On Friday, Bret Taylor, the chief of Twitter’s board, said that the company is “committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.”
Twitter, notes The Associated Press, could have simply asked Musk to pay $1 billion—the amount of money Musk said he would forfeit if he pulled out of the acquisition.
Nevertheless, Twitter appears intent on proceeding, regardless of what Musk wants.
According to The Associated Press, the discord between Musk and Twitter’s board of directors has largely played out over social media, with Musk lamenting to his 100 million followers that the social media company has failed to live up to its potential as a platform for unbridled free speech.
Amidst the tumult, Twitter’s shares began to fall, with Twitter’s value falling by 5% to $36.81—an amount significantly lower than the $54.20 Musk had already offered to pay.
Mike Ringler, an attorney for Elon Musk, wrote a letter to Twitter on Friday detailing the company’s alleged refusal to provide data about the prevalence of “fake or spam” accounts on the social media platform.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” the letter alleged.
Ringler opined that such information is fundamental to Twitter’s business and financial performance, and that any merger is contingent upon the company’s willingness to divulge usage and engagement metrics.
Ann Lipton, a professor of corporate governance at Tulane Law School, told CNBC that Twitter’s board of directors appears to be in a difficult position.
“They can’t just say, ‘Alright, let’s spare us the pain, Elon, we’ll let you knock the price down by $20 per share,’ or ‘we’ll settle, we’ll agree to walk away if you just pay the billion-dollar fee,’” Lipton said. “I mean, Twitter is just not in a position to be able to do that.”
Doing so, Lipton explained, would risk a lawsuit by the company’s own shareholders—some of whom have already filed legal complaints against both Musk and Twitter, alleging that the chaotic merger is putting their investments at risk.
Nevertheless, Lipton opined that Twitter is likely to have the upper hand.
“There’s a lot of reason to doubt that [Twitter] made such misrepresentations, but let’s assume that it did—it’s not actually a reason to cancel a merger agreement,” Lipton told CNBC.
In order for Musk to successfully allege a “material breach” of the agreement, he would have to demonstrate that Twitter made false statements that were so egregious they would likely have a long-term impact on the company’s growth and earning potential.
“[Musk] has yet to put forth evidence that this is in fact the case,” Lipton said.
Twitter, says Musk, will most likely proceed with its lawsuit, asking the Delaware Chancery Court to compel Musk to fulfill his contractual obligations and move forward with the merger.