The row over Elon Musk’s withdrawal from buying Twitter continues after the company called his decision to pull out “invalid and wrongful.”
Twitter says it has not violated any agreements and accuses the Tesla billionaire of violating the terms of the merger contract.
The letter comes in reaction to one sent by Musk’s lawyer on Friday, July 8, accusing the firm of failing to provide the data he requires to analyze the incidence of false or spam accounts.
He also accused the social media company of being in “material breach” of other aspects of the agreement.
Twitter’s lawyers said: “Twitter has breached none of its obligations under the agreement, and Twitter has not suffered and is not likely to suffer a company material adverse effect.”
The lawyers noted that the deal has not been dissolved, that the bank and equity commitments remain in place, and insisted Musk comply with their obligations.
William Savitt, of the firm Wachtell, Lipton, Rosen & Katz, wrote: “As it has done, Twitter will continue to provide information reasonably requested by Mr. Musk under the agreement and to diligently take all measures required to close the transaction.”
Musk’s attorney, Mr. Ringler, contended that Twitter’s long-held assessment that fewer than five percent of its monetizable daily active users are spam accounts looks to be erroneous, and so might have a “material adverse effect.”
A buyer must demonstrate that a company’s real operation differs significantly from what it committed to acquire, under that concept.
It is a high threshold that very few buyers who have changed their minds have successfully overcome.
Mr. Ringler’s letter included no information to support his claim that the estimate was incorrect or an alternative estimate.
Rather, he wrote: “Mr. Musk has reason to believe” that the true number of spam accounts is “substantially higher” than Twitter’s estimate.
The response from the social media platform sets the groundwork for a legal battle that might become one of the most unique judicial battles in corporate takeover history.
In the letter Twitter’s lawyer said: “Twitter reserves all contractual, legal, and other rights, including its right to specifically enforce the Musk parties’ obligations under the agreement.”
Legal squabbles over sour bargains usually result in settlements, either with a price decrease or a one-time payment.
Musk has agreed to pay a $1 billion reverse termination fee to the company if the deal goes through, which could happen if his debt financing falls through or authorities try to stop the purchase. Neither has happened.
The agreement also caps at $1 billion the amount the social networking service could sue for damages.
Source: The Wall Street Journal