Elon Musk do not wish to proceed with the purchase of Twitter. This was communicated by the lawyers of the tycoon, owner of companies such as Tesla o SpaceX, in a letter sent to the address of the social network last Friday. However, the deal, estimated at 41,000 million euros and announced with great fanfare last April, will continue to kick in the coming months. The application is determined to force the employer to keep his word; and, for this, he intends to resort to the courts.
“Twitter’s board is committed to closing the transaction at the price and terms agreed with Musk and plans to initiate legal action to enforce the merger agreement. We trust that we will prevail in the Delaware Court of Chancery,” Brett Taylor, the president of the social network, said in a tweet published last Friday.
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 (@btaylor) July 8, 2022
According to virtually all of the US media and acquisitions lawyers, in principle, the social network would have the upper hand in the courts. According to ‘Reuters’, the Delaware courts, in charge of the case, do not usually make it easy for businessmen to back down on their purchase agreements.
Specifically, there is nothing else favorable to Musk’s position, which took place in 2017 during a lawsuit between two pharmaceutical companies, according to ‘The New York Times’.
What is certain is that the future of the social network, which is already suffering the effects of Musk’s fright on the stock market, will go through the courts. “What will happen is that either the operation will be completed or the expected penalties will be paid. We will have to wait to see what the courts say, “explains Borja Adsuara, a lawyer specializing in digital matters, to ABC.
To achieve its objective, Twitter, which will present the lawsuit before the end of this week, intends to take advantage of a specific compliance clause of the agreement reached by Musk. This gives the company the right to sue you and force you to complete the deal. Although, with everything, it would not get rid of investing millions in the maintenance of the legal team in charge of demonstrating that the reasons given by the employer to get out of the agreement are not enough.
Holding onto the bots
Musk clings to Twitter’s lack of transparency when it comes to sharing the information necessary to understand the number of fake accounts and spam bots operating inside it, encrypted by the social network in less than 5% of total users. Something that the businessman’s lawyers already made clear in the letter announcing his intention to withdraw from the deal.
In the letter, the legal representatives of the businessman affirm that the tools and information that Twitter has made available to be able to compare the figures had “conditions, limitations of use or other characteristics” which has caused “that part of the information is minimally useful to Musk and his advisers.”
In the letter, the lawyers also note that, despite the lack of necessary information, the businessman “has been able to partially and preliminarily analyze the accuracy of Twitter’s disclosure,” and the data, although still under review, does not convince him: “All indications suggest that several of Twitter’s public disclosures are false or materially misleading.”
“These cases are common in transactions of this type,” explains Pere Simón, coordinator of the Master’s Degree in Digital Law at the International University of La Rioja (UNIR), in a conversation with this newspaper. “It is normal that additional information is requested, as Musk has done, because you may encounter unexpected situations. Even more so when we are talking about such an ambitious operation.”
It is clear, therefore, that Musk’s idea is to get get out of the deal without having to pay any penalty accusing the company of not having been clear when requested the necessary information to be able to close the agreement.
It should be remembered that, at the time, Musk and Twitter agreed to a payment as compensation for $1 billion in case one of the two got out of the deal. However, this clause could not be applied for any reason.
For example, the employer could avail himself of it in the event that he could not access the amount necessary to complete the purchase. Twitter, meanwhile, could back out of the deal if it receives a higher financial offer. Something that, considering the current price of the company, is completely unexpected.
Agreement Review
However, taking into account that the procedure will be thorny, and, for sure, expensive and long, it is not ruled out that, finally, Twitter and Musk reach an agreement that could lead to the sale of the social network at a cheaper price for the tycoon In this regard, it should be remembered that the deal was closed for a price higher than 54 dollars per share. The price of each one was yesterday, in the afternoon, around 34 dollars.
As ‘The New York Times’ collected, Musk himself already acknowledged a few months ago during a conference that a review of the price agreed with the application of the little bird was not out of the question.
And it is that, until last week, Musk was still looking for investors to support him in complying with the economic agreement. It should be remembered that, according to Forbes, Twitter has lost 49,000 million dollars since the deal was announced. Precisely, the depreciation of the social network led a group of Twitter shareholders a few weeks ago to file a lawsuit against Musk, whom they blame for having harmed the business with his statements.