Last week, Elon Musk said he was backing out of his deal to purchase Twitter for $44 billion. The billionaire took issue with the accuracy of the social media company's data regarding the percentage of users who are spam/bots, claiming it did not meet its "contractual obligations," according to a statement filed with the U.S. Securities and Exchange Commission. Of course, the social media giant wasn't about to let him walk out the door without a fight, reportedly hiring New York law firm Wachtell, Lipton, Rosen & Katz to take on the case.
According to Bret Taylor, the chairman of Twitter's board, they're "committed to closing the transaction on the price and terms agreed upon with Mr. Musk and [plan] to pursue legal action to enforce the merger agreement."
Musk, in turn, appeared unfazed by the legal threats, laughing about it on Twitter.
— Elon Musk (@elonmusk) July 11, 2022
Soon after he tweeted a photo of Chuck Norris playing chess with a single pawn on his side, commenting, "Chuckmate."
Chuckmate
— Elon Musk (@elonmusk) July 11, 2022
Since the acquisition, Musk has challenged the company's claim that less than 5 percent of users are spam/bots and argued Twitter did not provide the data required to analyze the accuracy of that figure for himself. In the SEC filing, Musk said the failure to hand over the information amounts to a "company material adverse effect," Bloomberg reports, so now they will be forced to in court.
Larry Hamermesh, a University of Pennsylvania law professor who specializes in Delaware corporate law disputes, describes an MAE as an “unexpected, fundamental, permanent” negative development -- akin to blowing a hole in the transaction that can’t be fixed. (Bloomberg)
A judge will now have to decide whether that occurred and if Musk's termination of the deal was justified.