[Asia Economy Reporter Kim Hyunjung] Elon Musk, CEO of Tesla, has declared the termination of the $57 trillion KRW-scale Twitter acquisition deal, escalating the conflict between the two parties into a legal battle.
On the 8th (local time), Musk stated that Twitter failed to fulfill its contractual obligation to provide data on fake accounts on the platform, violated acquisition contract terms by not seeking consent for changes in business operations such as employee layoffs, and announced his intention to terminate the $44 billion (approximately 57.2 trillion KRW) deal to acquire Twitter.
Twitter immediately pushed back, announcing plans to file a lawsuit to enforce the existing contract. Brett Taylor, Chairman of Twitter's Board, explained, "The board is committed to closing the deal at the agreed price and terms with Musk," and added, "We plan to pursue legal action to enforce the acquisition agreement."
According to CNBC reports, legal experts believe Musk cannot easily terminate the contract as intended and is likely to face a lengthy court battle lasting several months. Anne Lipton, a professor of Corporate Governance at Tulane Law School, noted that it would be difficult for Twitter to negotiate the acquisition price or settle with a penalty, as Twitter risks lawsuits from shareholders in such cases.
However, it was assessed that Musk has not provided sufficient evidence regarding Twitter's alleged lies about the number of spam accounts. According to the acquisition agreement signed by both parties in April, either party must pay a penalty of $1 billion (approximately 1.295 trillion KRW) if the contract is breached. Musk's legal counsel claimed in a letter to Twitter that Twitter had materially breached several provisions of the acquisition agreement and misrepresented the extent of fake accounts in a false and misleading manner. Professor Lipton stated that it is Musk's responsibility to present sufficient evidence to prove a "material breach of contract," so if the issue goes to court, Twitter is likely to have the advantage.
Brian Quinn, a professor at Boston College Law School, predicted that Twitter would file a complaint with the Delaware Court of Chancery, which handles corporate disputes, requesting the court to determine whether Twitter breached the contract and to order Musk to fulfill his contractual obligations and complete the acquisition.
Adam Sterling, Director of the Berkeley Center for Law, Business and the Economy, assessed that Twitter has a stronger legal basis, while Musk's position is relatively weaker. Sterling said, "Musk initially focused on bots (spam-sending automated software) and also mentioned company performance, so he seems to be throwing out every possible argument."
There is also a possibility of reaching an agreement. Professor Lipton explained that there is room for adjusting the acquisition price, but it is unclear at what point Musk would be satisfied. He said, "I think Musk wants to either terminate the deal or have a very dramatic price adjustment. Therefore, the two parties are currently far from an agreement."
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