Twitter sues Musk after he tries backing out of $44 billion deal

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Twitter sues Musk after he tries backing out of $44 billion deal
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A Delaware court will determine whether Elon Musk remains on the hook for the purchase or whether Twitter violated its obligation to provide Musk with data he requested, entitling him to walk away.

Musk agreed in April to buy Twitter but declared last week that he intended to walk away from the deal. To push Musk to abide by the acquisition agreement, Twitter sued him in Chancery Court in Delaware. The court will determine whether he remains on the hook for the purchase or whether Twitter violated its obligation to provide Musk with data he requested, entitling him to walk away.

In a letter to Musk’s lawyers on Sunday, Twitter’s lawyers said that his move to terminate the deal was “invalid and wrongful” and that Musk “knowingly, intentionally, willfully and materially breached” his agreement to buy the firm. The company has said that it is confident in its figures about spam accounts, and that it uses experts in spam to audit the count and ensure its accuracy.

If Musk successfully disentangles himself from Twitter, it could be disastrous for the company. Its stock has fallen more than 35 percent below his offer of $54.20 per share. Twitter’s business has also deteriorated in recent months. In May, Parag Agrawal, Twitter’s chief executive, said in a memo to employees that the company had not lived up to its business and financial goals.

In the past, Delaware’s Chancery Court has prevented companies from trying to walk away from deals. In 2001, for example, when Tyson Foods tried to back out of an acquisition of the meatpacker IBP, the court ruled that Tyson had to follow through with the agreement. In situations where the court has allowed buyers to exit, it has required them to pay damages. By most readings of Twitter’s contract with Musk, damages would be capped at $1 billion.

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