By Twitter has threatened to take legal action against Elon Musk as he tries to back out of a $44 billion deal to buy the social media company.
Hiring the services of big name U.S. law firm Wachtell, Lipton, Rosen & Katz LLP, Twitter prepares to take the case to Delaware Chancery Court.
The company argues that the Tesla CEO is leaving it worse off than it was when he said he would buy it, adding that Musk has eroded trust in Twitter, walloped employee morale, spooked potential advertisers, emphasized the company’s financial difficulties and spread misinformation about how it operates.
The court battle is likely to be protracted and immense, involving months of expensive litigation and high-stakes negotiations by elite lawyers. Twitter might win, but, if it loses, Musk could walk away by paying a breakup fee.
In a letter to Musk’s lawyers on Sunday, Twitter’s lawyers said that his move to terminate the deal was “invalid and wrongful” and that Musk “knowingly, intentionally, willfully and materially breached” his agreement to buy the firm.
Twitter’s stock plunged by more than 11 percent to one of its lowest points since 2020 as investors anticipated the coming legal battle. Since Twitter accepted Musk’s acquisition offer, on April 25, its stock has lost over a third of its value as investors have grown increasingly skeptical that the deal will get done on the agreed terms.
Meanwhile, Musk has reacted to the threat of legal action by Twitter’s board, saying the move was an attempt to force him to buy the company in court.
In a recent image tweet, the billionaire insisted that the Twitter board refused to disclose the information about the percentage of bots on Twitter, adding that they would now be forced to disclose the same information in court.
He also hinted that many were doubting his ability to raise the money to buy Twitter.
Last Friday, Musk’s lawyer, Mike Ringler filed for the termination of the Twitter acquisition deal. In a Securities and Exchange Commission filing, Ringler cited many reasons for his principal’s decision to opt out of the deal, noting that “Twitter has not complied with its contractual obligations.”
The lawyer claimed that Twitter did not provide Musk with the relevant business information he requested, as Ringler said the contract would require.
“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,” he claimed.
Ringler charged in the letter that Twitter breached the merger agreement because it allegedly contains “materially inaccurate representations.”
