Twitter Is Ready for a Potential Legal Battle With Elon Musk

There are many “drastic” actions Mr. Musk could take, but as it pertains to the deal, there are two clear possibilities: He could deliver a letter to Twitter saying he is terminating the deal, and he could sue Twitter. Those two actions would most likely, but not necessarily, happen simultaneously.

There are no clear grounds for Mr. Musk to try to break the deal, because Twitter has publicly disclosed that roughly 5 percent of its users are bots since it went public. But he may try to claim that this disclosure is intentionally misleading, a very high bar to meet legally.

In that case, Twitter could countersue. Twitter strongly believes that the deal contract is on its side, and that it would be an uphill battle for Mr. Musk. The deal has a “specific performance clause,” which gives the company the right to sue him and force him to complete the deal so long as the debt financing he has corralled remains intact. And even if that 5 percent estimate is off, Twitter warns in its regulatory filings that the number is an estimate and that it “could be higher than we have currently estimated.” The bar for using that as grounds to get out of a deal is high.

A case could be heard in Delaware, where Twitter is registered. Twitter would almost certainly seek an expedited case, given the size of the deal. A possible judge is Chancellor Kathaleen St. J. McCormick, who is also overseeing the Orlando Police Pension Fund’s suit over the deal.

Article source: https://www.nytimes.com/2022/07/08/business/musk-twitter-deal.html