Twitter vows to take Musk to court after the billionaire backs out of his $44 billion deal
Musk backs out of $44 billion deal to buy Twitter
The letter says, “Mr. Musk and his financial advisors at Morgan Stanley have been requesting critical information from Twitter as far back as May 9, 2022—and repeatedly since then—on the relationship between Twitter’s disclosed mDAU (monetizable daily active users who are verified Twitter members able to receive ads) and the prevalence of false or spam accounts on the platform.”
Twitter’s shares fall after Musk backs out of his deal to buy the company
Twitter could be entitled to a $1 billion break-up fee that would be paid by Musk
Under the terms of the agreement, Musk could owe Twitter a $1 billion break-up fee. This is why Tesla’s CEO is putting the blame on his decision to back away from the deal on the alleged “false and misleading representations” that he alleges were made by Twitter. Musk points out that he “negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.”
University of Richmond law professor Carl Tobias stated that “The way these things usually work is that if there’s a billion-dollar breakup fee and you’re the one trying to acquire, then that is enforced against you unless there’s some kind of material breach or some kind of reason that can be offered up that persuades a court that Twitter, for example, is not making good on the deal.”
There is still a chance that the deal can be renegotiated with a lower price more favorable to Musk. To help finance the first bid, the billionaire had to borrow funds against some of his holdings in Tesla which he reportedly was not happy about. Borrowing against his Tesla holdings was a risky move since a sudden decline in the car manufacturer’s stock could have forced Musk to sell additional shares triggering a margin call.