Musk gave up and didn’t buy it! Twitter to hire heavyweight lawyer to sue for breach of contract

  1. On July 8, Musk announced the cancellation of the $44 billion Twitter acquisition on the grounds that he did not believe Twitter’s claim that only 5% of profitable daily active users (mDAUs) were fake accounts.
  2. In February, Musk and Twitter had signed a legally binding agreement, and if either party terminated the deal, it would have to pay a sky-high termination fee of $1 billion.
  1. According to foreign media reports, Twitter has hired a heavyweight lawyer to fight a legal battle with Musk; but it is also reported that in order to avoid a lengthy legal battle, Twitter may choose to renegotiate and agree to reduce the purchase price.

On July 8, Elon Musk announced the cancellation of its $44 billion acquisition of Twitter, citing the possible number of spam accounts that Twitter assessed. inconsistent with reality. According to foreign media reports, in response, Twitter has hired a heavyweight law firm to prepare for a legal battle with Musk, which will officially start as soon as this week.

Bloomberg reported on the 10th that after Musk announced the termination of the acquisition of Twitter, Twitter immediately found a well-known US law firm “Wachtell, Lipton, Rosen & Katz”, which is good at handling corporate merger disputes. Twitter is expected to file a lawsuit this week, suing Musk for breach of contract, sources told Bloomberg.

Wachtell Lipton is headquartered in New York City, and Twitter employs lawyers including Leo Strine, former president of the Delaware Court of Chancery, which governs commercial matters, and William Savitt, a leading lawyer specializing in corporate mergers. The “poison pills” strategy that Twitter originally intended to use was invented in 1982 by Martin Lipton, the founder of Wachtell Lipton and a merger lawyer.

The poison pill strategy is that any individual or group acquires at least 15% of Twitter’s outstanding shares without the consent of the board of directors. The company will issue a large number of new shares and sell them to other existing shareholders at a discount to dilute the hostile acquirer Twitter’s shareholding ratio, so Musk has to buy more shares with more money, thereby reducing the willingness to buy.

If Twitter files a lawsuit against Musk, the two sides could face a lengthy legal battle, CNBC and Reuters reported. Ann Lipton, a professor at Tulane Law School, said that Musk has signed an acquisition agreement with Twitter, and it is impossible to walk away. So far, Musk does not have enough evidence to prove Twitter’s statistics on fake accounts. lie.

In April, Musk and Twitter signed a legally binding agreement to acquire Twitter for $54.20 per share for a total price of $44 billion. Under the terms of the agreement, if either party terminates the deal, it must pay a sky-high “termination fee” of $1 billion.

Shortly after the deal, however, Musk said he was reconsidering the deal. He said in May that he decided to put the deal on hold for now because he didn’t believe Twitter’s claim that only 5% of profitable daily active users (mDAUs) were fake accounts.

However, Musk and Twitter could also reach a settlement. To avoid a lengthy lawsuit, Twitter may opt to renegotiate and agree to a lower price, Ann Lipton said. The purchase price of $54.20 represents a 47% premium to Twitter’s closing price of $36.81 on July 8.

*Editor’s note: This article is for reference only and does not constitute an offer, solicitation or invitation, inducement, any representation of any kind or form, or any suggestion or recommendation. Readers should use their independent thinking skills to make their own investment decisions , If any loss is incurred due to relevant suggestions, it has nothing to do with “Jingshi Financial Media”, the editor and the author.

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