Billionaire CEO Elon Musk on Friday decided to back out of a $44 billion deal to buy Twitter, citing ongoing disagreements over the number of fake accounts on the platform.
While CEO Elon Musk may need to end his bid for Twitter, leaving him is not that easy, according to legal experts. Instead, Musk will likely face a lengthy court battle with Twitter that could take months to resolve.
According to Ann Lipton, professor of corporate governance at Tulane Law School. Twitter’s board of directors is in a challenging position. “You can’t just say, ‘Okay, take the pain off Elon, we’ll let you drop the price at $20 per share. Or we’ll make a deal, we’ll agree to walk away if you pay a billion-dollar break fee. I mean, Twitter can’t do that.
That would risk a lawsuit from Twitter shareholders, he added. Twitter shareholders have filed lawsuits against the company and Elon Musk himself over the messy deal.
Lipton said that the merger agreement is “very hard to figure out,” and Musk doesn’t appear to have provided enough evidence to support his claim that Twitter lied about its spam data.
Meanwhile, Twitter chairman Brett Taylor has promised that the company’s board of regisseur will take legal action against Musk.
“Twitter’s board of regisseur is committed to completing the transaction at a price also terms agreed with Mr. Musk and planned to take legal action to enforce the merger agreement,” Taylor tweeted.
“We are assured that we will win in the Delaware Cancer Court,” Taylor added. Referring to the Delaware courts that settle business-to-business disputes.
Musk signed a honestly binding agreement to buy Twitter for $54.20 per share in April. The agreement states that if one party terminates the deal, it must pay a $1 billion termination fee.