Last Friday, after several weeks of doubts and rumors that he really didn’t want to buy Twitter, Elon Musk confirmed that he was officially withdrawing his offer to buy the company. He did so through a communication to the SEC and a letter to Twitter’s board, in which he detailed his reasons for not going ahead with the operation. Logically, the company did not like the announcement at all, and he has sent a message to Elon Musk: we will see each other in court. Specifically in the Court of Equity of Delaware, in the United States.
Not even an hour had passed since Musk’s legal team made it public that he was officially unwilling to buy Twitter, the President of the company, and one of the CEOs of Salesforce, Bret Taylor, announced the taking of legal measures against him, pointing out that «Twitter’s board of directors is committed to closing the transaction at the price and terms agreed with Mr. Musk, and plans to take legal action to enforce the purchase agreement. We are confident of winning in the Delaware Court of Chancery«.
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.
— Bret Taylor (@btaylor) July 8, 2022
For many, that Musk finally decided to withdraw from the purchase of Twitter is no surprise. Many were already very sure that the operation would not progress. Others began to seriously doubt as soon as the CEO of Tesla and SpaceX began to put the first hits, which came soon. Shortly after he said he wanted to buy Twitter and turn it private, according to The Verge, Musk began laying the groundwork for pulling out of the deal, noting that Twitter was not being honest about the number of bots on the network. . For its part, Twitter has always insisted that it had the bots under control and that it intended to strengthen the purchase agreement.
When Elon Musk and Twitter signed the purchase agreement, both parties agreed to a $1 billion termination fee if either party withdrew from the deal for certain reasons. Musk has agreed to pay for it if he is unable to secure the funding he needs to complete the operation, something he has not yet secured. For its part, Twitter agreed to pay the fee if it found another buyer or its board recommended that shareholders vote against Musk’s offer.
To escape the settlement and also the payment of this amount, Musk alleges that Twitter broke the terms of the settlement by not being open enough to provide critical information about the company in regards to bots. In addition, in the communication of his decision to the SEC he does not mention the existence of the clause that establishes this payment. His legal team only expresses its reasons for withdrawing from the purchase.
Everything indicates that from now on a legal battle will open, which can last for years and be quite fierce. In the meantime, Twitter has already warned its employees in writing to refrain from discussing the matter.and that “avoid tweeting, talking on Slack about the matter or sharing any type of comment about the operation”, warning that the management would have “many limitations on what we can share«.
For now, on Twitter they are already taking steps towards filing the lawsuit, and The Verge has confirmed that have hired the law firm that invented the “poison pill” with which in the social network they initially tried to defend themselves against operations like Musk’s: Watchell, Lipton, Rosen & Katz.
The company has hired two specialist lawyers from the firm to strengthen its team. One is William Savitt, who has represented several companies fighting activist investors in Delaware courts. The other is Leo Straine, a former Chancellor of the Delaware Court of Chancery who has 20 years of experience as a judge in the state’s courts and who joined the firm in 2020.
For his part, Musk is said to have hired Quinn Emanuel Urquhart & Sullivan, a law firm that managed Samsung’s defense in the lawsuit against Apple patents that claimed that Galaxy devices were little more than a copy of the iPhone, and that he has already defended Musk in other cases.
