Twitter has reacted to Elon Musk’s attempt to back out of the $44 billion takeover of the social media company, calling it “invalid and unfair” and accusing the businessman of violating the merger agreement, according to a letter sent to attorneys for the social media company. billionaire.
Musk announced on Friday that he intended to back out of the Twitter purchase, citing alleged breaches of the merger agreement committed by the social media platform.
But in a letter addressed to Musk’s legal team dated Sunday, Twitter’s attorneys at Wachtell, Lipton, Rosen & Katz said Musk could not back out of the settlement, arguing that they were instead the Tesla chief executive and his team who “knowingly, intentionally, purposefully and materially” violated the agreement.
His “alleged termination is invalid and unfair, and constitutes a repudiation of his obligations under the agreement,” wrote William Savitt, a partner at Wachtell.
The letter, which was publicly recorded on Monday, cites three different clauses in the contract that Twitter says constitute violations and prevent Musk from refusing the purchase.
The first would relate to Musk’s obligation to assist in the preparation of regulatory filings on the acquisition. The second would require him to consult Twitter before making public statements about the transaction. According to the agreement, Musk “will be allowed to tweet about the merger or the transactions … as long as such tweets do not disparage the company or any of its representatives.”
It is not clear from the letter which specific communications Twitter is referring to. However, Musk has repeatedly egged on Twitter and its direction since the deal was announced — for example, responding to its chief executive, Parag Agrawal, with a poop emoji in a Twitter thread explaining the company’s approach to fake accounts. .
On Sunday, Musk also tweeted a meme made up of pictures of himself laughing at the prospect of Twitter sharing information about bots in court, though it’s unclear if this was posted before the letter from the social network’s lawyers was sent.
The third item cited Musk’s duty to help increase the debt and equity financing needed to settle the $44 billion deal.
Twitter is expected to file a lawsuit against Musk in the Delaware Court of Chancery in the coming days, according to a person briefed on the situation, as the standoff threatens to escalate into a messy legal battle.
Analysts suggested the parties could also strike a deal or negotiate the acquisition at a lower price, citing speculation that Musk is regretful due to the slump in tech stocks.
Musk said on Friday that Twitter violated the merger agreement by failing to provide enough information to prove that the number of fake accounts on its platform was less than 5%, as assessed in public disclosures. His team also disputed the number, suggesting the true number is potentially “extremely higher”.
In Wachtell’s letter to Musk, the company wrote that it “will continue to provide information reasonably requested by Musk under the agreement and will diligently take all necessary steps to close the transaction.”
On Monday, S&P said that Twitter’s “junk” credit rating is still under review for possible downgrade, explaining: “Musk’s disclosure of Twitter’s proposed acquisition carries several downside risks.” The agency added: “We do not speculate on the outcome of the litigation, but we believe it would increase uncertainty and reputational risk.”
Twitter’s share price dropped more than 11% in early trading on Monday, following news of Musk’s attempt to terminate the deal.
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