Twitter’s board says it’ll see Elon Musk in court

He. She It shouldn’t come as a huge surprise who – which Elon Musk quit His $44 billion offer to buy Twitter.

There was a report onRiskIn the Washington Post, of course, but also All those Tweets. So many Tweets. Why Do he is tweet So Many? Anyway, Musk’s plan to break the deal wasn’t announced in a tweet, but the Securities and Exchange Commission did announce late on Friday. The file is reformatted Very public claims That Twitter did not provide information that would allow his team to determine whether the company had correctly measured its number of fake users.

We can see why M&A auditors were wary.

Besides Musk’s previous complaints (about all bots), we found some other interesting parts The above-mentioned deposit. With our focus:

…Twitter has revealed that it will stop counting fake or spam users in its mDAU when it determines that these users are fake and it looks like a liar. Instead, we understand that, based on Twitter representations during a call with us on June 30, 2022 Twitter includes accounts that have been suspended — and thus are known to be fake or spam — in a quarterly mDAU account even when it is aware that suspended accounts have been included in that quarter’s mDAU..

First, are we sure that all suspended accounts are necessarily fake accounts? While none of your approved Twitter reporters here in FT Alphaville have been suspended, they may know some people who had their accounts temporarily suspended when their requests got a little high. Twitter’s terminology for this type of comment in the box will likely be different, and we’re assuming the social media platform’s PR team was already busy late Friday night.

Second, as Levin died noticed on twitterMusk’s team also complains that they requested a spreadsheet for the Goldman Sachs evaluation form and received a PDF instead:

On June 17, Mr. Musk requested a variety of board materials, including a working and basic 2022 financial model, a budget for 2022, a draft plan or updated budget, and a job A copy of the Goldman Sachs evaluation form on which the judgment is based. Twitter provided a pdf-only version of the final presentation to the Goldman Sachs board of directors.

Finally, the Musk team is tackling the issue of Twitter’s belt tightening after news of the acquisition:

Twitter’s conduct in firing two key high-level employees, the revenue product leader and general manager of consumers, as well as the July 7 announcement of laying off one-third of its talent acquisition team, implied the provision of the normal course. Twitter has also created a general hiring freeze that even extends to reconsideration of premium job offers. Furthermore, three Twitter executives have resigned since the merger agreement was signed: President of Data Science, Vice President of Twitter Service, and Vice President of Product Management for Health, Conversation, and Growth. The Company has not received the consent of a guardian to make changes in the conduct of its business, including the specific changes mentioned above.

FT Alphaville is Anyway the first to say That this may be an attempt to push Twitter to accept a lower purchase price. The Nasdaq Composite is down 26 percent this year, after all. While Twitter shares have lost a modest 15 percent by comparison, Musk’s offer now represents a 47 percent premium to the company’s current value of about $30 billion.

Twitter may not want to get into a protracted legal battle against a man who went toe-to-toe with the Securities and Exchange Commission and came out relatively unscathed.

But he can try to force Musk to complete the purchase. If we take the company’s late Friday president’s tweet at face value, litigation may be in the cards.

Twitter’s board is committed to closing the deal at the price and terms agreed with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident that we will prevail in Delaware court.

– Brett Taylor (@btaylor) July 8, 2022

The relatively low breakup fee is now important because it increases the risk that Twitter will pay Musk to complete the deal, rather than just asking for a one-time payout. our FT colleagues Sujit Indap and James Fontanella Khan report Damage is set at $1 billion.

Some readers will remember that buyer’s remorse wasn’t reason enough to allow Tyson Foods to pull out of its 2001 deal to buy IBP. And the As our colleagues point out That the Delaware Chancery Court had requested a follow-up until last year.

This article is from an appellate attorney in Texas Ravi Melkonian It may also provide some insight.

There is a lot of confusion in my timeline about whether Elon has the right to pull out of the $1 billion Twitter deal. No, he’d write that check right this second if he could walk away.

The agreement allows Twitter to try to get him to buy the company at the price he agreed to. 1/ pic.twitter.com/PmjJGa49Qx

– Ravi Melkonian (@RMFifthCircuit) July 9, 2022

The “follow-up legal action plans” cited by the Twitter chief can take any number of forms, of course. It could go to arguments in Delaware Chancery court, or end up renegotiating a simple deal. There may also be challenges in renegotiating a deal; Shareholders may not be happy if Twitter’s board accepts a lower price for the company, although the success of any such challenge would be a different question.

Given all the characters involved On the deal and its financing, the biggest surprise would be if the Twitter battle culminated in anything less than a media circus. If the case goes to court, True corporate law fanatics will surely miss Liu Strain on the bench.