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Nonetheless, Mr. Musk’s risk of strolling away may deliver 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 charge and stroll away, an possibility allowed solely beneath sure circumstances, comparable to if Mr. Musk’s financing fell by way of.
If Mr. Musk efficiently disentangles himself from Twitter, it could possibly be disastrous for the company. Its inventory has fallen greater than 35 p.c beneath his provide of $54.20 per share. Twitter’s enterprise has additionally deteriorated in latest months. In Might, Mr. Agrawal stated in a memo to staff that the corporate had not lived as much as its enterprise and monetary targets.
Now that Twitter has sued, Mr. Musk and his legal professionals are anticipated to reply. Whereas the timeline past then relies on many components, the corporate and Mr. Musk will more than likely be referred to as to a listening to in Delaware and undergo the invention course of, with the 2 sides digging up info they imagine are related to the case.
The case could then transfer to a trial, although there’s a probability the decide assigned to the case will dismiss Mr. Musk’s efforts to stroll away. If the go well with proceeds to trial, the decide will determine whether or not Twitter’s disclosures have been inadequate and constituted a cloth hurt to the deal.
Previously, Delaware’s Chancery Courtroom has prevented corporations 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 court docket dominated that Tyson needed to observe by way of with the settlement. In conditions the place the court docket has allowed consumers to exit, it has required them to pay damages. By most readings of Twitter’s contract with Mr. Musk, damages could 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 corporations from hostile consumers, just like the so-called poison pill that Twitter initially put in place to defend itself towards Mr. Musk.
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