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Twitter Sues Musk to Force Him to Complete $44 Billion Acquisition

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If Mr. Musk successfully disentangles himself from Twitter, it could possibly be disastrous for the corporate. Its stock has fallen greater than 35 percent below his offer of $54.20 per share. Twitter’s business has also deteriorated in recent months. In May, Parag Agrawal, Twitter’s chief executive, said in a memo to employees that the corporate had not lived as much as its business and financial goals.

Now that Twitter has sued, Mr. Musk and his lawyers are expected to reply. While the timeline beyond then is dependent upon many aspects, the corporate and Mr. Musk will almost definitely be called to a hearing in Delaware and undergo the invention process, with the 2 sides digging up facts they imagine are relevant to the case.

The case may then move to a trial, though there may be a likelihood the judge assigned to the case will dismiss Mr. Musk’s efforts to walk away. If the suit proceeds to trial, the judge will resolve whether Twitter’s disclosures were insufficient and constituted a fabric harm to the deal.

Prior to now, Delaware’s Chancery Court has prevented firms from attempting to walk away from deals. In 2001, for instance, when Tyson Foods tried to back out of an acquisition of the meatpacker IBP, the court ruled that Tyson needed to follow through with the agreement. In situations where the court has allowed buyers to exit, it has required them to pay damages. By most readings of Twitter’s contract with Mr. Musk, damages could be capped at $1 billion.

Twitter and Mr. Musk have assembled legal teams to duke it out. Leading Twitter’s efforts in Delaware is William Savitt, a lawyer at Wachtell, Lipton, Rosen & Katz. Wachtell Lipton is known for, amongst other things, developing legal tactics to guard firms from hostile buyers, just like the so-called poison pill that Twitter originally put in place to defend itself against Mr. Musk.

Mr. Savitt has experience before Delaware’s Chancery Court and previously defended firms against the likes of Carl Icahn and Pershing Square, the investment firm run by the billionaire William Ackman. But Mr. Musk is unlike some other corporate raider who preceded him, making him a very complex opponent.

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