Elon Musk may be preparing for the next chapter in his Twitter acquisition journey: court.
The transaction value was $44 billion Arrived in April Musk and Twitter, and the two sides have since worked out the deal. Mr. Musk requested information about how many Twitter accounts are bots, and Twitter gave Mr. Musk access to “fire hose, or a stream of tweets. She continued to share additional information with him.
Thursday, Washington Post It stated that the deal was in jeopardy, and that Mr Musk’s team “was expected to take potentially drastic action”. Article claims that could not previously be confirmed DealBook Newslettersurprised Twitter and its advisers, because they did not consider the deal in greater jeopardy than at any other time in recent months.
Mr. Musk did not respond to a request for comment. Twitter reiterated that it intends to “close the transaction and enforce the merger agreement at the agreed price and terms.”
There are many “drastic” actions Mr. Musk could take, but in terms of the deal, two possibilities are clear: he could send a message to Twitter saying he’s ending the deal, and he could sue Twitter. These two actions are likely to occur simultaneously, but not necessarily.
There are no obvious reasons for Mr. Musk to try to break the deal, because Twitter has publicly revealed that nearly 5 percent of its users are bots since it was announced. But he may try to claim that this disclosure is intentionally misleading, which is a very high impediment to legally fulfilling it.
In this case, Twitter can counteract. Twitter strongly believes that making the deal is on its side, and that it will be an uphill battle for Mr. Musk. The deal hasspecific performance condition‘, which gives the company the right to sue him and force him to complete the deal as long as the debt financing he has agreed to remains sound. Even if that 5 per cent estimate is holding up, Twitter warns in its regulatory filings that the figure is an estimate and that it “may be higher than we currently estimate.” Bar Use that as a basis to exit a trade is high.
The case can be heard in Delaware, where Twitter was recorded. Twitter will almost certainly pursue an urgent case, given the scale of the deal. A potential judge is Chancellor Kathleen St. J. McCormick, who also oversees Orlando Police Pension Fund lawsuit over deal.
The stakes are high. The most valuable part of Twitter right now is the takeover agreement with Mr. Musk. Its shares are down about 24 percent since April, and are trading well below the price agreed with Mr. Musk. Twitter’s stock fell 4 percent in premarket trading on Friday.
Twitter is seeing pressure on its advertising activity, hiring has frozen and it is lay off some employees. To accept an amount less than the price it originally negotiated with Mr. Musk, Twitter may expose shareholder issues. So while litigation can be costly, losing a deal could be worse.