Photo illustration: Sarah Grillo/Axios. Photo: Dimitrios Kambouris/Getty Images for The Met Museum/Vogue
Twitter on Tuesday made good on its threat to sue Elon Musk for trying to back out of his $44 billion takeover.
What to know: The case will be heard in Delaware Chancery Court, a venue that specializes in corporate disputes and which previously has heard cases in which acquirers seek to renege on signed agreements.
Some key allegations from the complaint:
- "Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter’s stockholders."
- "Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price."
- "Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away."
- "Twitter also negotiated for itself a right to hire and fire employees at all levels, including executives, without having to seek Musk’s consent."
What happens next: Twitter is asking the court for an expedited trial in September, so that the two parties don't bump into the drop-dead closing date of Oct. 24.
- Expect Musk to file a legal response to Twitter in the meantime, and possibly to counter-sue.
Outcome: There are several ways this could play out:
- Chancery Court finds for Twitter, and forces Musk to complete his purchase at the existing terms and conditions.
- Chancery Court finds for Musk and lets him walk.
- The two sides reach an out-of-court settlement that may or may not result in Musk owning Twitter (i.e., Musk pays a large breakup fee or Twitter agrees to sell for a lower price than $54.20 per share).
Go deeper: A timeline of the Musk-Twitter deal so far