Tesla CEO Elon Musk is terminating his $44 billion Twitter deal citing material breach reasons, according to a filing with the U.S. Securities and Exchange Commission. In response, Twitter chairman Bret Taylor said the Board is committed to the deal and will enforce the merger agreement through legal action in the Delaware Court of Chancery.
This is not the first time Elon Musk has decided to end the deal. Earlier in June, Musk threatened to walk out of the deal unless the company shares proof that spam and bot accounts were fewer than 5% of users who see advertising on the social media service. This week, Twitter executives revealed that the company removes more than 1 million spam accounts each day. In response, Musk commented, “that is indeed the real question.”
Here’s What Happens If Twitter Prepares for a Legal Action
Now, many legal experts believe Elon Musk can’t simply walk out of the deal. In fact, if Musk eventually terminates the deal, he will have to anyway pay a minimum breakup fee of $1 billion.
However, Twitter will likely choose to forsake the $1 billion and sue Elon Musk for more. The legal battle could likely stretch for months and signals more uncertainty for the social media company that has suffered from leadership changes, a falling share price, layoffs, and low morale.
Moreover, Elon Musk’s lawyer in the latest filing asserts Twitter fails to provide necessary data on spam and fake accounts. The data shared had come with limitations or other artificial formatting features. Meanwhile, Twitter claims they have shared enormous data on bots and fake accounts, including real-time API data. This will be an important take in the lawsuit.
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Richard Signorelli, a Twitter shareholder and a litigator, said:
“As a shareholder, I am hoping that Elon Musk just pays a hefty penalty to get out of the deal. As someone who uses Twitter, I don’t want him owning the company.”
Interestingly, Twitter will have to substantiate its 5% bot number through investigation at trial, or otherwise face the consequences for a potential material misrepresentation not just to Musk but to its shareholders.
According to law professors Carl Tobias and Brian Quinn, Twitter likely aims for a judicial order requiring Musk to complete the deal. However, these types of lawsuits had usually resolved through renegotiated sale prices. Musk’s claim on lack of data “is a hard argument to make.”
Binance CEO “CZ” take on the termination of the deal will be interesting, as Binance has committed $500 million in Elon Musk’s $44 billion Twitter takeover.
Dogecoin (DOGE) Integration into Twitter
DOGE prices have gained momentum since the announcement of the deal. With the end of the Twitter deal, Dogecoin’s integration into Twitter remains in doubt. Dogecoin’s (DOGE) price is down about 59% for the year.
The heated disputes between CEO Parag Agrawal and Elon Musk have impacted shareholders too. Share prices have dwindled massively during the disagreements between the Twitter board and Elon Musk.
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