Skip to content
  • About Us
  • Privacy Policy
  • Terms and Conditions
Broadcast News Network

Broadcast News Network

Daily Headlines Online

  • Home
  • Law and Legal
  • Society and Culture
  • Sports
  • Fun and Games
  • Spirituality
  • Contact Us
  • Toggle search form
  • Texas Supreme Court blocks order that allowed abortions to resume Law and Legal
  • Ensign’s Standard Bearer Healthcare REIT, Inc. Acquires Real Estate Assets in California Real Estate
  • Should you rent or buy a house? Use the ‘BURL’ rule to avoid financial regret, says real estate investor Real Estate
  • Washington’s Mount Rushmore of Sports: Alex Ovechkin, Darrell Green, Wes Unseld, Walter Johnson voted best of the best Sports
  • Native. American. The greatest injustice in sports history has now been corrected Sports
  • Las Vegas Raiders’ opponents ranked: TEs, No. 1 Sports
  • Two students win scholarships from the Japanese Cultural Society of Maui Society and Culture
  • July 4th 2022: Find Fireworks Near Montrose & La Crescenta Fun and Games

Elon Musk faces long legal war with Twitter as he abandons deal

Posted on July 9, 2022 By Administrator

Billionaire Elon Musk on Friday moved to back out of his $44 billion deal to buy Twitter, citing continued disagreements over the number of spam accounts on the platform.

While Musk may want to end his bid for Twitter, it’s not as easy as just walking away, according to legal experts. Instead, Musk likely faces a long battle ahead with Twitter in court that could take many months to resolve. 

Twitter’s board is in a very difficult position, said Ann Lipton, a professor of corporate governance at Tulane Law School. “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 break fee. I mean, Twitter is just not in a position to be able to do that.”

Doing so would risk triggering a lawsuit by Twitter shareholders, she added. Twitter shareholders have already filed a lawsuit against the company and Elon Musk himself over the chaotic deal.

Merger agreements are “very hard to get out of,” and so far, Musk appears to have provided insufficient evidence backing up his claims that Twitter lied about its spam figures, Lipton said.

Meanwhile, Twitter’s chairman, Bret Taylor, has already promised that the company’s board will take legal action against Musk.

“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,” Taylor wrote in a tweet. 

“We are confident we will prevail in the Delaware Court of Chancery,” Taylor added, referring to a Delaware court that settles disputes among businesses. 

Musk signed a legally binding agreement in April to buy Twitter for $54.20 a share. The agreement states that if either party broke off the deal, they’d be required to pay a $1 billion breakup fee. 

Not long after the agreement was reached, Musk began to hint that he was having second thoughts about the deal. In May, Musk said he decided to put his acquisition of Twitter “on hold” as he assessed the company’s claims that about 5% of its monetizable daily active users (mDAUs) are spam accounts. Twitter has said it has continued to share information with Musk, including turning over its “firehose,” the daily stream of tweets that flow through the platform.

In a letter on Friday, Musk’s lawyers accused Twitter of a “material breach of multiple provisions” of the deal agreement and claimed the company made “false and misleading representations” about the prevalence of fake accounts on its platform. 

“There’s a lot of reason to doubt that it [Twitter] made such misrepresentations, but let’s assume that it did, it’s actually not a reason to cancel a merger agreement,” Lipton said in an interview. 

In order for there to be a “material breach” of the deal agreement, Musk would have to prove that Twitter made false statements that were so egregious they’d have a long term impact on the company’s earnings potential, Lipton said. 

“He has yet to put forth evidence that that is in fact the case,” she added. 

Twitter appears to have the upper hand as the deal drama heads to court, Lipton said. The merger agreement includes a “specific performance clause,” which says Twitter has the right to sue Musk to force him to go through with the deal, as long as he still has the debt financing in place.

In the coming days, Twitter will likely file a lawsuit in Delaware and ask the judge to rule whether it violated the terms of the agreement, then order Musk to “perform his obligations under the contract and complete the merger,” said Brian Quinn, a professor at Boston College Law School. 

After that, Quinn said he expects both parties will continue to make their arguments in court, as part of a litigation process that could take a year to play out. “For litigation, that’s quick,” he added.

Adam Sterling, executive director of the Berkeley Center for Law and Business told CNBC that Twitter has a strong legal case while Musk’s is less so.

“He (Musk) makes a number of legal arguments — I think all of questionable standing,” Sterling said, pointing to Musk’s filing Friday. “(He) first focused on bots on the platforms but also performance of the company so, he’s kind of throwing all these arguments out there.”

Musk and Twitter could also reach a settlement.

Twitter might agree to a minor change in the deal price of $54.20 per share in order to avoid litigation, Lipton said. That may not please Twitter shareholders who liked the first offer. The purchase price represents a 38% premium to the company’s $39.31 closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in the firm. Shares of Twitter closed at $30.04 on Friday.

It’s unclear what Musk would settle for, Lipton said.

“I don’t know that Musk just wants to knock one dollar or two off the price per share,” she said. “I think Musk wants to not have the deal or a fairly dramatic repricing. So I don’t think the parties are anywhere near settling right now.”

Sterling said that the Delaware Chancery court is “designed to address issues like this so, it could make Musk follow through on the deal but that it could get complicated in the process. “Twitter appears to have a very strong legal argument but we’ve not seen a precedent at this scale or an opponent like Elon Musk so, there’s many questions about what he will do.”

CNBC tech reporter Jennifer Elias contributed to this report.

Law and Legal Tags:abandons, business news, Court decisions, deal, Elon, Elon Musk, faces, Internet, legal, long, Musk, Technology, Twitter, Twitter Inc, War

Post navigation

Previous Post: Fall 2022 Announcements: Religion & spirituality
Next Post: Let’s Replace Cancel Culture With a Culture of Honesty

Related Posts

  • Marijuana, hemp, CBD and delta-8 in Texas: what’s legal and what’s not Law and Legal
  • Abortion law foes object to fast-tracking Florida legal fight Law and Legal
  • Six Time and Expense Reports For Law Firms Law and Legal
  • The Dobbs Decision Has Unleashed Legal Chaos for Doctors and Patients Law and Legal
  • Why Yale Law’s dean says eliminating tuition for students in need benefits the legal profession Law and Legal
  • Minnesota THC edibles law surprises some GOP legislators : NPR Law and Legal

Archives

  • August 2022
  • July 2022
  • June 2022

Categories

  • Fun and Games
  • Law and Legal
  • Real Estate
  • Society and Culture
  • Spirituality
  • Sports

Recent Posts

  • Lizzy Savetsky’s Personal Battle Against Alcoholism
  • Washington’s Mount Rushmore of Sports: Alex Ovechkin, Darrell Green, Wes Unseld, Walter Johnson voted best of the best
  • Legal experts say Supreme Court abortion decision has raised myriad ethical, legal dilemmas
  • Cuphead Bosses Tier List: Ranked All Fights [July. 2022]
  • Spiritual union: why Gulf migrants are turning to evangelical Christianity | Christianity
  • Better Call Saul Brings Gene Closer To A Kim Wexler Reunion Fun and Games
  • Arts in Society Grant to Promote Cross-sector Work through the Arts in 2022 Society and Culture
  • Built Expands Commercial Real Estate Product Suite for Lenders With Acquisition of Nativ Real Estate
  • Four Days of Fun at Crystal Frolics Fun and Games
  • Oscar Grant’s Mom, Experts Talk Raising Black Boys In Today’s Society Society and Culture
  • Redfin: These housing markets are the most at risk of falling home prices Real Estate
  • Retail Apocalypse: Sports Retailer Abruptly Closing All Stores Sports
  • New abortion laws cause confusion on college campuses : NPR Law and Legal

Calendar

February 2023
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
2728  
« Aug    

Pages

  • About Us
  • Contact Us
  • Privacy Policy
  • Terms and Conditions

Tags

4th abortion big California Call Community cultural culture decision estate Fireworks Fun Games Greater health health care home Homes housing July Las Las Vegas Raiders launch law laws legal music News NPR Raiders ranked real real estate Saul Society spiritual Spirituality sport Sports state Texas time Twitter Vegas win

Most Popular

  • Lizzy Savetsky’s Personal Battle Against Alcoholism
  • Washington’s Mount Rushmore of Sports: Alex Ovechkin, Darrell Green, Wes Unseld, Walter Johnson voted best of the best
  • Legal experts say Supreme Court abortion decision has raised myriad ethical, legal dilemmas
  • Cuphead Bosses Tier List: Ranked All Fights [July. 2022]
  • Spiritual union: why Gulf migrants are turning to evangelical Christianity | Christianity

Copyright © 2023 Broadcast News Network.

All rights reserved