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Elon Musk is backing out of the Twitter deal. Friday last week, a filing with the Securities and Exchange Commission made things official, and the social media giant isn’t happy about it. Twitter Chairman Bret Taylor expressed the company’s intent to push legal action. In relation to that, Twitter reportedly hired the firm Wachtell, Lipton, Rosen & Katz and the founding partner, Martin Lipton, who proposed the poison pill the company previously used.
After months of guessing whether the Elon-Twitter deal would be pushed or not, we finally have an answer: no. However, it would be another grueling story for all involved in the issue, as Musk’s SEC filing means the start of a long legal battle. Taylor tweeted about the company’s response to this on Friday.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” says the tweet posted an hour after Musk released the SEC filing. “We are confident we will prevail in the Delaware Court of Chancery.”
As everyone has predicted, Musk is using the Twitter bots issue to escape the deal, but the SEC filing also claims that Twitter made an agreement breach by firing two executives and executing a hiring freeze. According to Musk’s team, these actions performed without permission clearly caused the business to change its “ordinary course.”
Musk’s team is composed of Quinn Emanuel Urquhart & Sullivan, which is quite known for its past works serving Musk before for a defamation case and defending Samsung against Apple over allegations of copying the iPhone. Twitter, on the other hand, added William Savitt and Leo Strine as the key lawyers on their team. The two are known for their respective works, especially Strine, who used to be a Chancellor of the Delaware Chancery Court and chief justice of the Delaware Supreme Court from 2014 to 2019.
The legal battle is expected to be big since it could mean a huge win for Twitter. The $44 billion agreement translates to $54.20 per share, though each share only costs more than $30 these days. Also, both parties signed to pay a $1 billion termination fee in case one of them backed out of the deal, which, in this case, is charging towards Musk.