Author: Mike Ross
Twitter board of directors wants to enforce the founder of Tesla and SpaceX, Elon Musk, to purchase it for $ 44 billion, as stipulated by the agreement concluded by the parties.
Rejection of the Deal
Elon Musk, the CEO of Tesla and the world’s richest man, announced the cancellation of a $44 billion bid to acquire Twitter.
Musk’s lawyer wrote to Twitter’s top legal officer that the firm had “materially violated numerous clauses of the merger agreement.” Musk has grounds to suspect that the actual numbers of bots and spammy Twitter accounts are much higher than the social network’s stated figure of “less than 5%.”
Due to this news, Twitter shares fell nearly 6% after the official close of the exchange session. At the same time, Tesla shares increased by almost 4%.
Twitter has filed a lawsuit against American businessman Elon Musk for his refusal to purchase the company. According to documents provided by Twitter representatives to the Delaware state court on Tuesday, July 12, the firm seeks to ensure that Musk satisfies the conditions of the acquisition agreement.
“Musk’s behavior reveals that he is attempting to avoid the binding contract he voluntarily signed and attempting to hurt Twitter in the process,” the lawsuit stated, according to AFP. “The defendant’s offenses have caused and will continue to cause irreparable injury to Twitter.”
The court will now have to consider if Musk may cancel the acquisition deal.
According to Reuters, a four-day trial session is being schedule for mid-September.
Why Musk Changed his Mind
Earlier, on July 8, Elon Musk, the world’s richest man, announced the termination of a contract to acquire Twitter. He pointed out that the corporation “significantly violated various merger agreement clauses.” Musk, in particular, argued that the actual number of fake and spammy Twitter accounts is far greater than the “less than 5%” stated by the social network.
At the beginning of the contract signing, financial analysts saw something was wrong. Elon would have been unlikely to buy Twitter. After all, the company’s market value, estimated at $ 28 billion, is far lower than Musk’s offer of $44 billion.
On July 8, Twitter chairman Bret Taylor stated that the firm still expects to close the purchase “at a price and parameters agreed upon with Musk” and intends to take legal action to enforce the merger agreement. Taylor tweeted, “We are optimistic we will win in Delaware Chancery Court.”
Musk took to his Twitter account to respond to the announcement by posting a sarcastic meme.
So far, there is no conclusion to the story. It is unclear who will pay the fine and win the trial. Nevertheless, both parties may be accused of not being honest right from the onset but let’s see what the court has to say. We’ll update you thereafter.