Twitter says it’s going to sue Elon Musk for trying to back out of the deal.
Musk signed a binding merger agreement but now wants out.
Twitter’s warning to Elon Musk following his effort to back out of his $44 billion purchase agreement: we’ll see you in court.
“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,” Twitter’s chairman, Bret Taylor, tweeted less than an hour after Musk’s legal team said in a filing with the Securities and Exchange Commission that he wanted out of the deal. “We are confident in our ability to triumph in the Delaware Court of Chancery.”
If you’ve been following the twists and turns of this transaction, you’ll know that Twitter intends to fight. Soon after Musk announced his intention to acquire Twitter and take it private, he began laying the framework for why he may back out, saying that Twitter was withholding information regarding the amount of bots on the network. Twitter has stressed to Musk and the public that it has control over bots and would enforce the merger deal.
When Musk and Twitter signed the agreement, they promised to pay a $1 billion termination fee if either party dropped out for particular reasons. Musk committed to pay the charge if he is unable to acquire the cash required to complete the buyout, which he has not done so far. Twitter also promised to pay the fee if it found another buyer or if its board recommended that investors reject Musk’s bid.
Musk is clearly trying to get out of the arrangement without paying anything because he claims Twitter violated the terms of the agreement by withholding vital commercial information concerning bots. The breakup fee is not mentioned in his SEC filing on Friday describing his reasons for pulling out of the agreement.
With Twitter threatening legal action to force Musk to pay up, this already bizarre transaction might quickly devolve into a lengthy, nasty court war. Sean Edgett, the company’s general counsel, advised workers in an internal email issued Friday and seen by The Verge to “refrain from Tweeting, Slacking, or providing any opinion regarding the acquisition,” and that management would be “extremely constrained on what we can publish.”
“I understand this is a difficult moment, and we appreciate your patience and continuous dedication to the critical work we have underway,” Edgett wrote.