Twitter sues Elon Musk: How much will he have to pay if he loses?
The much-vaunted $44 billion bid for Twitter has been abandoned. Now, a lengthy court case will begin to keep Elon Musk to his word.
The huge bid made by Elon Musk to buy out Twitter, considered by many analysts to be an offer too big to refuse, has broken down into a large squabble between one of the world’s richest men and a social media giant. Musk alleges that Twitter broke its part of the bargain, while Twitter argues that Musk has unfairly pulled out of their arrangement. Expect a long legal battle.
Musk has now been sued by Twitter over the buyout breakdown. If he loses, he could be forced to buy Twitter regardless. The deal included a provision called a “specific performance clause”, a court could force Musk to buy the company as long as he has financing in place, which he claimed to have secured in May.
“Musk’s exit strategy is a model of hypocrisy,” the lawsuit said, accusing the billionaire of making “bad faith” arguments against Twitter and carrying out “public and misleading attacks” on the company. Twitter also says that Musk “conjured” up a supposed breach of contract.
The other outcome if Musk loses is he could be forced to pay the $1 billion separation fee. At present, Musk is also trying to get out of paying that as mentioned in his Securities and Exchange Commission (SEC) filing. The SEC also has the power to remove Musk’s leadership of his companies if he is found to have broken buyout rules.
Why is he pulling out of the deal?
Back in June, Musk’s lawyers filed a letter stating that part of the SpaceX founder’s funding was contingent on him receiving the information about bots to evaluate the deal. Musk “is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing,” his lawyers wrote according to NBC News.
With Musk rescinding the Twitter acquisition, the Tesla and SpaceX CEO will have to pay a $1 billion breakup fee to Twitter, unless he can prove that he wasn’t provided with the necessary information on the company and the social media company significantly misled him.