Elon Musk Twitter Deal Is “Not Terminated,” Tech Firm’s Lawyer Insists; Stock Falls 11% As Tesla CEO’s Meme Mockery Continues

·4 min read

UPDATED with Twitter lawyers’ letter, closing stock price. Lawyers for Twitter called Elon Musk’s planned termination of his $44 billion takeover of the social media firm “invalid and wrongful” in a letter disclosed to the SEC after the close of today’s trading.

William Savitt of the law firm Wachtell, Lipton, Rosen & Katz asserted that Twitter had lived up to its end of the bargain. Since the surprise acquisition was finalized last April, it has descended into a legal morass, with expectations for a protracted battle to come.

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The withdrawal by Musk and his backers is “invalid and wrongful, and it constitutes a repudiation of their obligations under the agreement,” Savitt wrote. Countering Musk’s attorneys’ claims in their own letter last Friday as the deal crumbled, he added, “Twitter has breached none of its obligations under the agreement.” He added that Musk and his deal partners “have knowingly, intentionally, willfully, and materially breached the agreement.”

The deal has not been called off, Savitt continued, citing bank debt and equity commitments, and therefore “Twitter demands that Mr. Musk and the other Musk parties comply with their obligations under the agreement.”

As it has done, Twitter will continue to provide information reasonably requested by Mr. Musk under the Agreement and to diligently take all measures required to close the transaction.

As the stock market took full measure of the merger drama today, Twitter shares slumped 11% to close at $32.65, well below the $54 a share that Musk had agreed to pay in the spring.

Continuing his jabs at Twitter via the very same social media platform, Musk tweeted to his nearly 101 million followers a caption-less image of a valkyrie, a figure from Norse mythology known for guiding the souls of deceased warriors. The post went up just after Twitter’s filings and official legal demands became public.

PREVIOUSLY: Twitter stock is down around 7% on its first day of trading since Elon Musk late Friday followed through on a threat to walk away from his agreed-upon $44 billion purchase of the beleaguered social media platform.

Twitter threatened legal action to hold Musk to his word and has now hired big name U.S. law firm Wachtell, Lipton, Rosen & Katz LLP as it prepares to take the case to Delaware Chancery Court. A suit could be filed soon, according to reports.In an SEC filing Friday, Musk attorneys wrote that he is terminating the $54.20-a-share merger because, “to the extent to which Twitter has underrepresented the number of false or spam accounts on its platform, that may constitute a Company Material Adverse Effect” under the terms of the agreement. They said Musk is also evaluating whether the company’s “declining business prospects and financial outlook” would also constitute a material adverse effect, giving Mr. Musk a separate and distinct basis for terminating the Merger Agreement.”

Twitter responded that its Board of Directors “is committed to closing the transaction at the price and terms agreed upon with and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.” Chairman Bret Taylor first tweeted the statement Friday and it was retweeted by CEO Parag Agraway, CFO Ned Segal, Vijava Gadde, chief legal officer and  board members Patrick Pichette and Martha Lane Fox.

Musk began threatening to walk away from the late-April deal back in May. Tesla stock was falling (it’s changing hands today at at around $34) and the billionaire Tesla founder kept raising the bot, or fake account, issue. Twitter insists it has provided sufficient information. Musk’s deal includes a $1 billion breakup feel but Twitter says he needs a good reason for walking way, like financing falling through, otherwise the deal remains is legally binding. Now it looks like a Chancery Court judge will decide.

In a mocking tweet, Musk stocked a series of statements next to photos of himself laughing. “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot info. Now they want to force me to buy Twitter in court. Now they have to disclose bot info in court.”

 

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