Twitter will sue Elon Musk to enforce the $44 billion transaction that the billionaire wants to back out of, chairman of the social media platform board said on Saturday.
Tesla owner now likely faces a long legal battle against Twitter that could take several months to resolve.
“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 tweeted.
On Friday, Musk pulled the plug on his $44 billion deal to acquire Twitter, a regulatory filing showed.
Musk accused the social media giant of providing “misleading” data on the quantity of fake accounts on the platform.
Twitter handed over “misleading representations” of the number of spam bots on the social network, and has not “complied with its contractual obligations” to provide information about how to assess how prevalent the bots are, said Musk’s representatives on Friday in a letter to Twitter as part of a regulatory filing.
Musk also stated that he was quitting the deal because Twitter dismissed high-ranking executives and one-third of the talent acquisition team, in violation of Twitter’s responsibility to “maintain substantially intact the material components of its current business organization.”
The Tesla CEO had earlier threatened to walk away from the deal if the company cannot show that less than 5% of its daily active users are automated spam accounts.
Ann Lipton, professor of corporate governance at Tulane Law School, said upon the deal that “they cannot just say alright let’s spare us the pain, Elon we will 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 numbers, Lipton said.
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