Nonetheless, Mr. Musk’s risk of strolling away may convey Twitter again to the negotiating desk, permitting the billionaire to purchase the corporate at a reduction. The 2 sides may additionally settle with Mr. Musk paying damages to Twitter. Or he may pay a $1 billion breakup payment and stroll away, an choice allowed solely below sure circumstances, corresponding to if Mr. Musk’s financing fell by means of.
If Mr. Musk efficiently disentangles himself from Twitter, it may very well be disastrous for the corporate. Its inventory has fallen greater than 35 % under his supply of $54.20 per share. Twitter’s enterprise has additionally deteriorated in current months. In Could, Mr. Agrawal mentioned in a memo to staff that the corporate had not lived as much as its enterprise and monetary objectives.
Now that Twitter has sued, Mr. Musk and his attorneys are anticipated to reply. Whereas the timeline past then relies on many components, the corporate and Mr. Musk will most probably be known as to a listening to in Delaware and undergo the invention course of, with the 2 sides digging up information they imagine are related to the case.
The case might then transfer to a trial, although there’s a likelihood the choose assigned to the case will dismiss Mr. Musk’s efforts to stroll away. If the swimsuit proceeds to trial, the choose will determine whether or not Twitter’s disclosures had been inadequate and constituted a fabric hurt to the deal.
Previously, Delaware’s Chancery Court docket has prevented firms from attempting to stroll away from offers. In 2001, for instance, when Tyson Meals tried to again out of an acquisition of the meatpacker IBP, the courtroom dominated that Tyson needed to observe by means of with the settlement. In conditions the place the courtroom has allowed patrons to exit, it has required them to pay damages. By most readings of Twitter’s contract with Mr. Musk, damages can be capped at $1 billion.
Twitter and Mr. Musk have assembled authorized groups to duke it out. Main Twitter’s efforts in Delaware is William Savitt, a lawyer at Wachtell, Lipton, Rosen & Katz. Wachtell Lipton is legendary for, amongst different issues, growing authorized techniques to guard firms from hostile patrons, just like the so-called poison tablet that Twitter initially put in place to defend itself in opposition to Mr. Musk.