Twitter stock is down around 7% on its first day of trading since Elon Musk late Friday followed through on a threat to walk away from his agreed-upon $44 billion purchase of the beleaguered social media platform.
Twitter threatened legal action to hold Musk to his word and has now hired big name U.S. law firm Wachtell, Lipton, Rosen & Katz LLP as it prepares to take the case to Delaware Chancery Court. A suit could be filed soon, according to reports.
In an SEC filing Friday, Musk attorneys wrote that he is terminating the $54.20-a-share merger because, “to the extent to which Twitter has underrepresented the number of false or spam accounts on its platform, that may constitute a Company Material Adverse Effect” under the terms of the agreement. They said Musk is also evaluating whether the company’s “declining business prospects and financial outlook” would also constitute a material adverse effect, giving Mr. Musk a separate and distinct basis for terminating the Merger Agreement.”
Twitter responded that its Board of Directors“ is committed to closing the transaction at the price and terms agreed upon with and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.” Chairman Bret Taylor first tweeted the statement Friday and it was retweeted by CEO Parag Agraway, CFO Ned Segal, Vijava Gadde, chief legal officer and board members Patrick Pichette and Martha Lane Fox.
Musk began threatening to walk away from the late-April deal back in May. Tesla stock was falling (it’s changing hands today at at around $34) and the billionaire Tesla founder kept raising the bot, or fake account, issue. Twitter insists it has provided sufficient information. Musk’s deal includes a $1 billion breakup feel but Twitter says he needs a good reason for walking way, like financing falling through, otherwise the deal remains is legally binding. Now it looks like a Chancery Court judge will decide.
In a mocking tweet below, Musk stocked a series of statements next to photos of himself laughing. “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot info. Now they want to force me to buy Twitter in court. Now they have to disclose bot info in court.”
— Elon Musk (@elonmusk) July 11, 2022