August 8, 2022

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Twitter sues Musk after trying to undo a $44 billion deal

Twitter sues Musk after trying to undo a $44 billion deal

Now that Twitter has filed a lawsuit, Mr. Musk and his lawyers are expected to respond. While the timeline after that depends on many factors, it is likely that the company and Mr. Musk will be called to a hearing in Delaware and proceed with the discovery process, with both sides digging up the facts they believe are relevant to the case.

The case may then go to trial, although there is an opportunity for the judge assigned to the case to reject Mr. Musk’s efforts to leave. If the lawsuit goes to trial, the judge will decide whether the Twitter disclosures were insufficient and materially damaging to the deal.

In the past, the Delaware Judicial Court has prevented companies from trying to walk away from deals. In 2001, for example, when Tyson Foods tried to back out of its takeover of the meatpacking company IBP, the court ruled that Tyson had to pursue the agreement. In cases where the court allowed buyers to move out, it required them to pay damages. According to most readings of Twitter’s contract with Mr. Musk, the damages will be set at $1 billion.

Twitter and Mr. Musk have assembled legal teams to get rid of this. Twitter’s efforts in Delaware are led by William Savitt, attorney at Wachtell, Lipton, Rosen & Katz. Wachtell Lipton is known, among other things, for developing legal tactics to protect businesses from hostile buyers, such as The so-called contraceptive pill Originally set up by Twitter to defend itself against Mr. Musk.

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Mr. Savitt has experience before Chancery Court in Delaware and has previously defended companies such as Carl Icahn and Pershing Square, the investment firm run by billionaire William Ackman. But Mr. Musk Unlike any other striker in the company before himwhich makes it a particularly complex opponent.

Musk’s legal team includes his personal attorney, Alex Spiro, as well as attorneys from Skadden, Arps, Slate, Major and Flom. Skadden is a corporate law firm, with extensive experience debating cases in Delaware court, including the bid of luxury giant LVMH Moet Hennessy Louis Vuitton. to dismantle its $16 billion deal to acquire Tiffany & Company. Skadden’s client, LVMH, eventually shaved off about $420 million from the purchase price.

Mike Isaac Contribute to reporting and Jack Big Contribute to research.