Twitter says it will take Elon Musk to court over cancelled purchase of the company
SCOTT SIMON, HOST:
Elon Musk says he no longer wants to buy Twitter. Twitter says, we'll see you in court. NPR tech correspondent Shannon Bond looks at how the predictably unpredictable billionaire has launched the social network into a crisis.
SHANNON BOND, BYLINE: The world's richest man caught everyone by surprise when he struck a $44 billion deal to buy one of his favorite toys, Twitter. But less than three months later, Elon Musk wants out. The issue - a dispute he's been having very publicly with Twitter for weeks over how many accounts are fake or spam. Here's Musk back in May at a conference in Miami.
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ELON MUSK: In making the Twitter offer, I was obviously reliant upon the truth and accuracy of their public filings. And if those filings are not accurate, it's simply not - that's - it's not - you can't pay the same price for something that is much worse than they claimed.
BOND: The short version of this fight - Twitter says less than 5% of accounts are not real people. Musk thinks that percentage may be a lot higher. Twitter says it shared information with Musk. But in a letter to the company on Friday, Musk accused it of refusing to give him what he needs to verify those claims and of making, quote, "false and misleading representations." That, he said, is grounds to call off the deal. Legal experts told me it's not that simple.
ANN LIPTON: Even if he's right factually, even if every single fact is true, and that's very much in contention, that actually isn't a reason out of a merger agreement.
BOND: Ann Lipton is a professor of business law at Tulane University.
LIPTON: Merger agreements are drafted to avoid exactly what Musk is doing, which is try to find some tiny little false thing and then say, whoops, I get to walk away now.
BOND: After Musk made his letter public, Twitter shot back. In a tweet, board chair Bret Taylor said the company would take Musk to court. That's something the agreement does allow. It says Twitter can sue Musk to force him to complete the purchase.
JOE GRUNDFEST: And that means he promised to buy the company for a price. Well, he'd better show up and buy the company for that price.
BOND: Joe Grundfest is a former federal securities regulator who's now a professor at Stanford University. Even just for breaking off the deal, Musk could be on the hook for a $1 billion penalty or even more. For Twitter, the stakes are higher, and that's why it may go as far as suing its unwilling buyer to get the deal done. The company has struggled to turn a profit and attract more users and advertising dollars. Its share price has fallen sharply, and investors are counting on the $54.20 a share Musk promised to pay. Now a protracted legal battle seems inevitable, says Grundfest.
GRUNDFEST: Nobody's going to be a winner here. And the question simply is how much money, at this point, will flow from Elon Musk to Twitter to make this go away?
BOND: And how damaged will the company be on the other side? The deal has cast a cloud of uncertainty and hurt morale. Some employees say whether Musk backs out or reluctantly takes over Twitter, it's a lose-lose proposition. Shannon Bond, NPR News. Transcript provided by NPR, Copyright NPR.