After the news broke that Tesla CEO Elon Musk is backing out of his $44 billion bid to buy Twitter, the social media company was quick to respond.
Less than an hour after the deal fell through, Twitter Chairman Bret Taylor said that the platform is going to take legal action against Musk under a merger term called "specific performance" that theoretically could result in a Delaware judge forcing Musk to buy the company. It can also seek damages.
"The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement," Taylor tweeted.
"We are confident we will prevail in the Delaware Court of Chancery," Taylor continued, following Musk's legal team saying that the billionaire wanted out of the deal in a filing with the Securities and Exchange Commission.
According to Axios, Musk agreed to pay Twitter $1 billion in the event he terminates his decision in the short-form merger agreement. However, due to the "specific performance" in the long-form merger plan, it says that "if you try to back out of this, we can take you to court in Delaware, and the court will force you to buy the company at the agreed price."
Axios noted that Musk could alternatively pay Twitter a larger fee to be released from his obligation to buy the company.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022