Home Hollywood Twitter Sues Elon Musk to Enforce $44B Takeover – The Hollywood Reporter

Twitter Sues Elon Musk to Enforce $44B Takeover – The Hollywood Reporter


Twitter has sued Elon Musk over his decision to walk away from a $44 billion takeover of the social media company, saying he must complete the deal under a merger agreement.

“After publicly tweeting and proposing and signing a seller-friendly merger agreement, Musk clearly believed that he — unlike other parties bound by Delaware contract law — was free to change his mind and company, destroy its operations, destroy shareholder value, and walk away,” the lawsuit filed Tuesday in Delaware Chancery Court wrote.

In April, Musk offered $44 billion in cash to buy Twitter to “unlock” its potential to become a “global platform for free speech.” He started buying stocks cautiously in January, accumulating his stake in the company until he owned 5% two months later.

But Musk was unhappy with the deal as Tesla’s stock plummeted and his fortune plummeted. He told Twitter on July 8 that he would terminate his proposed acquisition of the company. In a letter, he argued that Twitter violated the merger agreement, citing “false and misleading statements” about its bots and spam accounts. He also questioned his “declining business and financial outlook” after key executive departures, layoffs and hiring freezes.

Twitter responded by saying it would take legal action to ensure the deal was done at the agreed price and terms.

According to the complaint, Twitter could force Musk to proceed with his acquisition. It pointed to language in the merger agreement stating that the company “shall be entitled to specific performance or other equitable remedies to execute” the transaction. Specific performance is a remedy in contract law where a court orders a party to adhere to the terms of the contract as strictly as possible.

“Twitter negotiated for itself a strong right to specifically enforce the terms of the agreement, including the right to compel the defendants to complete the deal and ensure that Musk is personally bound by the terms,” ​​the complaint reads.

Despite no debt financing, a Delaware Chancery Court in 2021 refused to allow the private equity firm to back out of a deal to buy cake decorating company DecoPac. In this case, the company also took steps aimed at building the foundation to renege on the deal, as Musk allegedly did.

Twitter said in June it would comply with Musk’s demands for internal data on spam bots and fake accounts after threatening to pull out of the deal. The company said it would provide access to so-called “firehouse” data, which includes a real-time record of more than 500 million tweets posted each day and information about the accounts and devices that sent posts. Musk may have a hard time walking away from the deal, as he believes Twitter made the material misrepresentations he relied on, as the company has shown in securities filings that its estimated spam accounts for a small percentage of its monetizable daily active users. To 5% may be too low.

“We have exercised significant judgment in making this decision and therefore our estimates of fake or spam accounts may not accurately reflect the actual number of such accounts, and the actual number of fake or spam accounts may be higher than our estimates, ” filed with the Securities and Exchange Commission.

Twitter is represented by Potter Anderson & Corroon, Peter Walsh of Wilson Sonsini Goodrich & Rosati, and merger law heavyweights Wachtell, Lipton, Rosen & Katz. Musk hired Quinn Emanuel Urquhart and Sullivan, who successfully defended him in defamation lawsuits and represented him in shareholder cases trying to take Tesla private.

The parties agreed in the merger agreement to sue any disputes in the Court of Chancery, which is known for resolving conflicts faster than other courts. Equity judges specialize in commercial law and try cases without a jury. The case could be resolved through a settlement within months.

In a similar case that ended in a settlement, Tiffany sued French luxury goods giant LVMH in Delaware court. The company alleges that Louis Vuitton’s owners deliberately tried to delay and renegotiate the $16 billion acquisition. LVMH finalized a deal that valued Tiffany at $15.8 billion.

Twitter shares closed at $32.65 on Monday, a far cry from the $54 per share Musk agreed to pay at a $41.4 billion valuation. Musk’s meddling with the company is widely believed to have caused its value to plummet.

In addition to shareholders seeking to force the company to share internal documents about its spam bots and fake accounts, Twitter has also been sued by investors seeking to block the deal.

Source link

Previous articleWho Knew Anna Wintour Moonlights As A Celebrity Matchmaker?
Next articleOpinion | Brittney Griner’s fate poses a warning to U.S. sports and Hollywood


Please enter your comment!
Please enter your name here