Social media platform Twitter is reportedly looking to file a lawsuit as early as this week against Telsa CEO Elon Musk after he announced his intention to pull out of the $44 billion deal to acquire the social media giant on Friday.
Bloomberg reported on Sunday that the company has hired corporate law firm Wachtell, Lipton, Rosen & Katz and will bring the case to the Delaware Court of Chancery, a non-jury trial court that deals with corporate law in the state of Delaware.
However, it’s unclear whether the potential lawsuit will eventually end up with Musk purchasing the platform, either at the previously agreed price, at a re-negotiated price or not at all.
Last week, Twitter chairman Bret Taylor pledged to pursue legal action against Musk for trying to pull out of the deal, stating the board is “committed to closing the transaction” as previously agreed and planned to pursue legal action “to enforce the merger agreement.”
However, some believe that Musk’s move to terminate the deal could just be another tactic to renegotiate the terms of the pricey agreement.
Accelerate Financial founder and CEO Julian Klymochko told his 24,200 Twitter followers on Friday that a negotiated settlement will be the “most likely outcome.”
It may take a while to play out, and will likely be quite entertaining, but I believe a negotiated settlement will be the most likely outcome— Julian Klymochko.eth (@JulianKlymochko) July 9, 2022
If not a reduced price of >$45.00, then a negotiated break fee that is >$3 billion out of Elon's pocket
Angelo Zino, an analyst at CFRA Research, made a similar prediction to nonprofit media organization NPR on Sunday that there would be “no chance” for the deal to be put through at $54.20 per share as previously agreed.
"You’re either going to see a 15 to 20% drop in the offer price to get Elon Musk engaged again, or he continues to play the bot card,” he said.
The billionaire struck the deal to buy Twitter for $54.20 per share on April 25, but the platform’s share price has fallen 32.1% since then, down to $36.81 per share at the time of writing.
Musk also has an avenue to pull out of the deal but will be slapped with a $1 billion “termination fee” payable to Twitter, according to the initial Securities and Exchange Commission filing submitted on April 25.
Crypto Twitter weighs in
Musk’s decision to step away from owning Twitter has mainly been seen as a negative by the platform’s crypto community, who supported his plans to remove all spam and scam bot accounts from the micro-blogging platform.
I’m glad Musk isn’t going to run Twitter but that means we have to face an even uglier problem: the people who currently run Twitter.— Matthew Green (@matthew_d_green) July 9, 2022
A poll from crypto trading platform OKX on Friday found that 38.8% of respondents said Musk terminating his bid would be bad for Crypto Twitter due to the proliferation of spam bots. However, the majority, 40.4%, said they didn’t care.
Others have pledged their hopes that Musk could use the funds to instead “bail out the crypto industry instead” amid the long-running crypto winter.
Since @elonmusk has terminated the $44 Billion Dollar Twitter deal maybe he can bail out the crypto industry instead— WendyO.eth✨ (@CryptoWendyO) July 8, 2022
Elon Musk’s intention to end the $44 billion Twitter deal was sent as a letter to the Twitter board on Friday.
The letter said Musk is terminating the merger because Twitter “appears to have made false and misleading representations,” arguing that Twitter was not clear about its process for auditing spam and fake accounts and identifying and suspending such accounts.
Reacting to the news, Musk expressed his amusement on Monday, sharing a meme image of himself suggesting that the lawsuit will force Twitter to share the data surrounding bot activity.