Twitter, which has hired M&A heavyweight Wachtell, Lipton, Rosen & Katz LLP, is busy suing Musk for abandoning plans to buy the company for $44 billion, according to people familiar with the matter. It is reported that Twitter plans to file a lawsuit earlier this week. Musk brought in Quinn Emanuel Urquhart & Sullivan LLP.
The company led him successfully to defend against a defamation charge in 2019 and represented him in an ongoing shareholder lawsuit over his failed 2018 attempt to take Tesla private.
Delaware is home to more than half of all U.S. public companies, including Twitter, and more than 60 percent of the Fortune 500. There, judges in the Chancellor’s Office — business law experts — hear cases without a jury and cannot award punitive damages. Efforts to end a deal could end within months, often ending in a settlement to avoid further squabbles, based on past merger fights.
The Delaware Chancery Court generally disapproves of exiting merger agreements, and judges have a say in whether a breakup fee must be paid. In Musk’s acquisition deal with Twitter, the fee was $1 billion.
According to the agreement, if Musk defaults, he needs to bear a breakup fee of $ 1 billion, but from the point of view of Musk in the latest legal document, it seems that he wants to put the blame on Twitter, thereby “blaming” the breakup fee.
In a regulatory filing after the U.S. stock market closed on Friday, Musk announced plans to drop a $54.20-a-share bid for Twitter, accusing the company of misrepresenting user data. Twitter chairman Bret Taylor responded by saying he would enforce the agreement in an uphill court battle.
Shares of Twitter fell 5.1% to $36.81 in formal trading and fell another 4.8% to around $35 in after-hours trading.
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