Still, the threat of Mr. Musk leaving could bring Twitter back to the negotiating table, allowing millionaires to buy the company at a discounted price. Both sides could also be resolved by Mr. Musk paying damages to Twitter. Or he could pay a $ 1 billion split fee and leave. This is an option that is only allowed in certain situations, such as if Mr. Musk’s funding fails.
If Mr. Musk was successfully released from Twitter, it could be disastrous for the company. That share is more than 35 percent below his offer of $ 54.20 per share. Twitter’s business has also deteriorated in recent months. In May, Agrawal said in a memo to his employees that the company had not achieved its business and financial goals.
Mr. Musk and his lawyer are expected to respond as Twitter has filed a proceeding. The timeline since then depends on many factors, but the company and Mr. Musk are probably invited to a hearing in Delaware, and through the discovery process, dig up the facts that both believe to be relevant to the case.
The case may then be brought to trial, but the judge assigned to the case may dismiss Mr. Musk’s efforts to leave. If the proceedings proceed to trial, the judge will determine if Twitter’s disclosure was inadequate and caused significant harm to the transaction.
In the past, Delaware’s Chancery Court has prevented companies from moving away from trading. For example, when Tyson Foods tried to cancel the acquisition of meat packaging company IBP in 2001, the court ruled that Tyson had to comply with the agreement. In situations where the court allowed the buyers to leave, the court demanded that they pay damages. Most readings of Twitter’s contract with Mr. Musk will limit damages to $ 1 billion.
Twitter and Mr. Musk have formed a legal team to make it public. Leading Twitter’s efforts in Delaware is William Savitt, a lawyer for Wachtell, Lipton, Rosen & Katz. Wachtell Lipton is famous for developing legal tactics to protect businesses from hostile buyers, especially like the so-called poison pill that Twitter first installed to protect himself from Mr. Musk. ..