Bret Taylor, the chairman of Twitter, announced that he intends to sue Elon Musk, founder and CEO of Tesla – one of the richest men in the world – in order to enforce the merger deal.
Taylor stated in a tweet on July 8:
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.
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On Friday, July 8, Elon Musk said that he was canceling his $44 billion bid to purchase Twitter since the social media company had broken numerous merger agreement clauses.
According to the letter submitted on his behalf to the company’s top legal officer on Friday:
Mr. Musk is terminating the Merger Agreement because 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, and is likely to suffer a Company Material Adverse Effect.
Attorney Mike Ringler of Skadden Arps said in the letter, which was made public in a Securities and Exchange Commission filing that Twitter had broken its contractual commitments.
According to the letter, Musk’s request for relevant business information was ignored by Twitter:
For nearly two months, Mr. Musk has sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform” (our letter to you dated May 25, 2022)
$44 Billion Deal Between Elon Musk And Twitter
On April 25, 2022, Elon Musk and Twitter announced a $44 billion agreement, giving the world’s richest man ownership of a social network with more than 200 million subscribers. The Tesla CEO was going to take over a firm he had previously chastised for not fulfilling its potential as a medium for “free speech.”
Although the $44 billion transaction did receive unanimous board approval, it did not happen right away. Instead, the acquisition was planned to close in late 2022 and requires shareholder and regulatory approval.
Elon Musk’s $44 billion acquisition of Twitter was put on hold on May 13 when he questioned the quantity of fake or spam accounts on the social media site. And then, on May 17, he mentioned in a tweet that until the spam and false account issue had been handled, the agreement “cannot move forward.”
After that, by accusing Twitter of committing a “material breach” by withholding information on the number of bots using its network, Elon Musk, on Monday, June 6, delivered his most credible threat to withdraw from the $44 billion deal yet.
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The recent development in a protracted and complicated battle between the Tesla executive and the social media network, his action was the most overt indication that he may break his agreement to buy the company.
Investors and experts were holding their breath as the deal’s procedures moved forward; everyone was waiting for the final announcement. However, it was clear that Musk would be subject to a $1 billion “break fee” if he decided to back out of the agreement at any point.
Featured image from Flickr, chart from Tradingview.com