Tesla CEO Elon Musk is terminating his $44 billion Twitter deal citing material breach reasons, according to a filing with the U.S. Securities and Exchange Commission. In response, Twitter chairman Bret Taylor said the Board is committed to the deal and will enforce the merger agreement through legal action in the Delaware Court of Chancery.
This is not the first time Elon Musk has decided to end the deal. Earlier in June, Musk threatened to walk out of the deal unless the company shares proof that spam and bot accounts were fewer than 5% of users who see advertising on the social media service. This week, Twitter executives revealed that the company removes more than 1 million spam accounts each day. In response, Musk commented, “that is indeed the real question.”
Here’s What Happens If Twitter Prepares for a Legal Action
Now, many legal experts believe Elon Musk can’t simply walk out of the deal. In fact, if Musk eventually terminates the deal, he will have to anyway pay a minimum breakup fee of $1 billion.
However, Twitter will likely choose to forsake the $1 billion and sue Elon Musk for more. The legal battle could likely stretch for months and signals more uncertainty for the social media company that has suffered from leadership changes, a falling share price, layoffs, and low morale.
Moreover, Elon Musk’s lawyer in the latest filing asserts Twitter fails to provide necessary data on spam and fake accounts. The data shared had come with limitations or other artificial formatting features. Meanwhile, Twitter claims they have shared enormous data on bots and fake accounts, including real-time API data. This will be an important take in the lawsuit.
