Musk decided to back out of the deal due to disagreements over the number of users on the platform.
Legal experts say that it is not as easy as just walking away from a project. It's likely that Musk will face a lengthy battle in court that could last many months.
A professor of corporate governance at a law school said that the board is in a tough spot. They can't just say, "Alright, let's spare us the pain, we'll let you knock the price down by $20 per share, or we'll settle, we'll agree to walk away if you just pay the billion dollar break fee" I don't think it's possible forTwitter to do that.
She said that doing so could lead to a lawsuit by the shareholders. The shareholders have filed a lawsuit against the company.
Merger agreements are difficult to get out of, and so far, Musk appears to have provided insufficient evidence to back up his claims.
The company's board will take legal action against Musk.
Taylor said that the board is committed to closing the transaction on the price and terms agreed upon with Musk.
The Delaware Court of Chancery is where disputes between businesses can be settled.
In April, Musk signed a legally binding agreement to buy the social networking site. If both parties broke off the deal, they would have to pay a $1 billion fee.
After the agreement was reached, Musk started to have second thoughts. In May, Musk said he put his acquisition of Twitter on hold as he assessed the company's claims that 5% of its users are fake. According to the company, it has continued to share information with Musk, including turning over thehose.
In a letter on Friday, Musk's lawyers accused the company of a "material breach of multiple provisions" of the deal agreement and claimed the company made "false and misleading representations" about the prevalence of fake accounts.
Lipton said in an interview that it was not a reason to cancel the merger agreement.
In order for there to be a material violation of the agreement, Musk would have to prove that the false statements were so egregious that they would have a long term impact on the company's earnings potential.
She said that he had yet to show that it was the case.
As the deal drama heads to court, it appears that the upper hand has been taken by the social networking site. The merger agreement states that if Musk doesn't have the debt financing in place, he can be sued by the company.
A professor at Boston College Law School said that the lawsuit will likely be filed in Delaware and that the judge will have to order Musk to complete the merger.
As part of a litigation process that could take a year, both parties will argue in court.
There could be a settlement between Musk and the social media company.
The price of the deal may be changed in order to avoid litigation. Those who liked the first offer may not like that. The last trading day before Mr. Musk disclosed his 9% stake was April 1, 2022. On Friday, the company's shares closed at $30.06.
It's not clear what Musk would settle for.
She said she didn't know if Musk wanted to knock a dollar or two off the price. Musk doesn't want to have a deal or a repricing. I don't believe the parties are close to agreeing on anything.
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