Twitter has a strong legal case against Elon Musk, who walked away from his $44 billion deal to acquire the company, but may opt for a renegotiation or settlement rather than a lengthy court battle, according to legal expert sources.
Musk's enthusiasm for going ahead with the deal has been in doubt.It has been since at least May, when he said the deal was "on hold" until he could verify whether Twitter's claim that fewer than 5% of accounts are bots or spam was correct. He accused Twitter of withholding information, while the company said he was acting in good faith and providing everything required by the terms of the agreement.
By increasing the accusations about the percentage of bots and spam on the platform, Musk cut Twitter's stock price and was trying to use this to force Twitter to renegotiate the deal at a lower price.
Given this, experts mention that Twitter has a legal advantage, Well, in the Delaware courts, where the dispute between the two parties is expected to be litigated, they have set the bar very high so that the purchasers can abandon their agreements. But target companies often choose the certainty of a renegotiated deal at a lower price or financial compensation over a messy court battle that can drag on for months.
Musk's main claim against twitter is that the company broke its agreement because you won't share enough information with him to support your claim that spam and fake accounts make up less than 5% of active Twitter users. Twitter stood by that estimate, but also said the number of such accounts may be higher.
Musk also said in a letter to Twitter that the company's misrepresentation of the number of spam accounts could be a "material adverse effect (MAE)" that would allow it to opt out under the terms of the contract. .
Twitter has not provided the requested information by the Musk for almost two months, despite his repeated and detailed clarifications aimed at simplifying the identification, collection and disclosure of the most relevant information.
Legal experts said Delaware courts view EAWs as dramatic and unexpected events that harm a company's long-term performance. Business contracts like the one with Musk and Twitter are so prescriptive that a judge ruled that an EO has only been validly activated once in the history of such litigation, in the case of German health care group Fresenius Kabi AG ending its deal with US generic drugmaker Akorn in 2018.
In this case, a court ruled that Akorn's assurances to Fresenius that it was meeting its statutory obligations were inaccurate. It also found that Akorn withheld facts about his deteriorating performance that emerged in the whistleblowers' allegations.
The legal experts dismissed the idea that inaccurate spam account numbers would amount to an EAW for Twitter at the same level as the problems affecting Akorn.
Musk also claimed that Twitter violated its agreement by firing two key senior employees, its chief product officer and its chief consumer officer, without their consent, as required by their contract.
More often than not, courts rule in favor of target companies and order acquirers to shut down their transactions, a legal remedy known as "specific performance." However, many companies choose to reach an agreement with their acquirers to end the uncertainty about their future that can weigh on their employees, customers and suppliers, while other companies allow the acquirers to leave in exchange for financial compensation.
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In other words, now twitter will be forced to show its true numbers.
So: "We don't want a fascist on our platform!"
Now: "Damn fascist, leave us your money or we'll sue you!"