Legal experts: “It’s unprecedented in a matter of this size and there’s no such thing as Musk.”
A lengthy court battle is expected to continue as Elon Musk, CEO of electric vehicle maker Tesla, has announced that he is terminating the deal to acquire Twitter worth 57 trillion won.
Musk notified Twitter on the 8th (local time) that it would close the deal to acquire Twitter for $44 billion.
Twitter is in violation of its contractual obligations to provide fake account status on Twitter, and has significantly violated the terms of the acquisition agreement, including not seeking consent for changes in business conduct, including termination of employees.
Twitter then announced that it would file a lawsuit to force Musk to fulfill the deal.
“The board is committed to closing the deal at the price and terms agreed upon by Musk,” said Twitter Board Chairman Brett Taylor.
In this regard, legal experts believe Musk will not be able to close the deal as easily as he intended and will likely face a lengthy, multi-month court battle, CNBC reported.
Ann Lipton, professor of corporate governance at the Tulane Law School, noted that Twitter’s board was in a very difficult position.
Twitter is just ‘good.
This is not a situation where you can say, ‘I will cut the acquisition price by $20 per share’ or ‘I will agree to back down if I only pay billions of dollars in penalties.’
In that case, Twitter risks facing lawsuits from shareholders.
Professor Lipton said the deal is very difficult to break in the middle, and the situation so far does not show that Musk has provided enough evidence to support the claim that Twitter lied about its spam account figures, Lipton said.
According to the takeover agreement signed by Musk and Twitter in April, if either party breaches the contract, they are required to pay a $1 billion penalty.
Musk’s lawyers in a letter to Twitter alleges that Twitter was in grave violation of several provisions of the takeover agreement and that it falsely and misleadingly portrayed the prevalence of fake accounts.
However, Lipton said Musk had to prove that Twitter made false statements that were too malicious to say there was a “significant breach of contract” and had long-term consequences for Twitter’s revenue potential.
Professor Lipton added that Twitter appears to have an advantage if the matter goes to court.
Brian Quinn, a professor at Boston College Law School, said Twitter would file a complaint with the Delaware Court of Equity Law, which deals with business-to-business disputes within a few days, determine whether the company had breached its terms, and ask Musk to fulfill its contractual obligations and complete the deal. I expected him to ask for orders.
Adam Sterling, director of the Berkeley Center for Law Firms, said Twitter had a strong legal basis, while Musk had less.
“Musk initially focused on bots (automatic spamming software),” Sterling said.
It’s throwing out all possible grounds,” he said.
Both parties may reach an agreement.
Lipton predicted that Twitter could reach an agreement to adjust the acquisition price slightly to avoid lawsuits.
However, he added, it is unclear to what extent Musk will be satisfied.
“I think Musk wants a halt or a very dramatic price adjustment,” Lipton said.
So, for now, the two sides are far from an agreement.”
“Twitter seems to have a very strong legal basis,” Sterling said.
“But there’s never been an issue of this scale, and there’s never been a match like Musk,” he said.
/yunhap news