Twitter has Legal Edge in Deal Dispute with Elon Musk

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Twitter has Legal Edge in Deal Dispute with Elon Musk
10 Jul 2022
7 min read


News Synopsis

According to legal experts, Twitter Inc has a strong legal case against Elon Musk for walking away from his $44 billion deal to acquire the U.S. social media company, but it may opt for a renegotiation or settlement rather than a lengthy court battle.
The Delaware courts, where the two parties' dispute will be heard, have set a high bar for acquirers to be allowed to abandon their deals. However, according to three corporate law professors interviewed by Reuters, target companies frequently prefer the certainty of a renegotiated deal at a lower price or financial compensation to a messy court battle that can last for months.

"The argument for settling at something lower is that litigation is expensive," said Adam Badawi, a law professor at UC Berkeley. "And this thing is so messy that it might not be worth it."
Musk's main complaint against Twitter is that the San Francisco-based company broke their agreement by refusing to share enough information with him to back up its claim that spam or fake accounts account for less than 5% of its active users. Twitter has not changed its estimate, but it is possible that the number of these accounts is higher.