Twitter ready for possible legal battle with Elon Musk

Elon Musk may be gearing up for the next chapter in his Twitter takeover journey: judgment.

The $44 billion deal was reached in April between Mr. Musk and Twitter, and since then both parties have been working to finalize the deal. mr. Musk requested information on how many Twitter accounts are bots, and Twitter granted Mr. Musk access to their “fire hose, ”Or a stream of tweets. He continued to share additional information with him.

On Thursday, Washington Post said the deal was in jeopardy. Musk’s team was expected to take potentially drastic action. Article claims that cannot be verified DealBook newslettertook Twitter and its advisors by surprise because they didn’t think the deal was in any greater danger than at any other point in recent months.

mr. Musk did not respond to a request for comment. Twitter confirmed that it intended to “close the deal and enforce the merger agreement at the agreed price and terms.”

There are a lot of “abrupt” moves Mr. Musk could agree to, but as far as the deal is concerned, there are two clear possibilities: he can send a letter to Twitter saying he’s canceling the deal, and he can sue Twitter. These two events are likely, but not necessarily, to occur at the same time.

There is no clear reason for Mr. Musk to try to break the deal because Twitter has publicly said that roughly 5 percent of its users are bots since it went public. But he may try to claim that this disclosure is deliberately misleading, which is a very high bar for legal compliance.

In this case, Twitter may file a counterclaim. Twitter is adamant that the contract is on its side and that it will be an uphill battle for Mr. Trump. Musk. The deal hasspecial feature clause“Which gives the company the right to sue him and force him to complete the deal as long as the debt financing he has driven in remains intact. And even if that 5 percent estimate is wrong, Twitter warns in its regulatory filings that this number is an estimate and that it “may be higher than what we currently estimate.” The bar for using this as a reason to exit a trade is high.

The case could have been heard in Delaware, where Twitter is registered. Twitter will almost certainly seek an expedited review of the case, given the size of the deal. A possible judge is Chancellor Catalyn St. J. McCormick, who also oversees Orlando Police Pension Fund lawsuit over deal.

The stakes are high. The most valuable part of Twitter right now is the acquisition agreement with Mr. Musk. Its shares are down about 24% since April and are trading well below the price agreed with Mr. Trump. Musk. Twitter shares fell 4% in premarket trading on Friday.

Twitter is under pressure on its advertising business, has suspended hiring and dismissal of some employees. To settle for a price lower than what he originally agreed with, Mr. Musk could subject Twitter to shareholder lawsuits. So while litigation can be costly, losing a deal can be even worse.