Twitter vows legal battle after Elon Musk terminates $44bn deal
What's the story
The Elon Musk-Twitter saga is poised to become a courtroom drama after the billionaire decided to pull out of the deal to buy the microblogging site.
In response to Musk's decision, Twitter said that it "plans to pursue legal action to enforce the merger agreement."
The Tesla chief pulled the plug on the $44 billion acquisition citing "misleading" statements from the company.
Context
Why does this story matter?
Musk's decision to acquire Twitter had created a certain buzz around the organization.
However, before the buzz died down, the billionaire has terminated the deal. Many expected this to happen, as there were multiple red flags along the way.
Now, we are to witness the next episode of Musk v/s Twitter as an elongated courtroom drama awaits us all.
Termination
Twitter failed to preserve material components of organization: Musk
There were murmurs about Musk terminating the deal because of the spam account issue that has been hanging over it for a while.
However, it still surprised everyone when he actually pulled out of the acquisition.
He walked from the acquisition mainly due to the bots issue. He also cited Twitter firing high-ranking executives and talent acquisition team as reasons to terminate the deal.
Information
'Twitter breached multiple provisions of the agreement'
"Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement," Musk's lawyers said in the court filing.
Twitter's words
Twitter will take the fight to Delaware Court of Chancery
Musk's decision to terminate has not gone down well with Twitter. Its chairman Bret Taylor took to the microblogging platform and said, "The Twitter Board 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."
Legal battle
What lies ahead for Musk and Twitter?
Twitter's decision to sue Musk has set the stage for a protracted legal battle. The track record of Delaware courts says that disputed mergers and acquisitions often end up with the companies renegotiating the deal.
Twitter will try to recoup the deal or at least get the breakup fee of $1 billion, which Musk may not pay since he has terminated the deal.
Information
Twitter's shares are 36% down than Musk's offered price
Musk's decision to terminate the acquisition sent Twitter's share down by 6% in extended trading. Overall, that is 36% below the $54.20/share Musk offered to pay in April.