Musk v Twitter: Legal battle looms after billionaire pulls out of £37bn takeover
Elon Musk may be gearing up for a lengthy legal battle after Twitter said it would be suing the billionaire for backtracking on his $44bn (£37bn) takeover.
Musk accused the platform of breaching the terms of the takeover agreement as well as making “false and misleading representations.”
“Sometimes Twitter has ignored Mr Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr Musk incomplete or unusable information,” Musk’s lawyer said in a statement filed to the US Securities and Exchange Commission (SEC).
According to Musk, Twitter’s board failed to provide data that would enable him to “make an independent assessment of the prevalence of fake or spam accounts.
Following Musk’s dramatic backtrack, chairman Bret Taylor said the company’s board was “committed to closing the transaction” agreed upon with the the entrepreneur and it would plan “to pursue legal action to enforce the merger agreement.” Under the agreement’s terms, Musk must pay $1bn to break off the contract.
Executive director of the Berkeley Center for Law and Business Adam Sterling has questioned Musk’s legal arguments, suggesting they had “questionable standing”. He said the Tesla founder “first focused on bots on the platforms but also performance of the company so, he’s kind of throwing all these arguments out there”, he told CNBC.
Some suggest an intense legal battle could be dodged if the social media firm agreed to knockdown the offer price of $54.20 per share.
However, this seems unlikely from a Twitter shareholder perspective.
It is understood that Twitter has also blocked its staff from discussing the merger, sending a memo to employees.
The Tesla chief executive, who is in the race to become the world’s first trillionaire, originally announced his intention to buy the platform in late April but after a few weeks he put the deal on hold, claiming he needed more information about the percentage of fake accounts on the platform.
In mid-June, the board unanimously recommended shareholders approve the deal following a meeting between Musk and Twitter employees when he reasserted his intention to move forward with the acquisition.