The legal fight between Elon Musk and Twitter has seen some Big Law firms setting up for the major fight that looms as the world’s richest man seeks to pull out of the $44 billion deal to buy the social media business.
Twitter has hired Wachtell Lipton Rosen & Katz as it prepares a lawsuit with the Delaware Court of Chancery against Musk early this week, according to media reports.
Following Musk’s notice that he intends to walk away from the deal Twitter’s board want to hold him to buy the business at the $54.20 per share in what will be a messy and very expensive fight.
Wachtell Lipton has probably the leading legal practice in Delaware, where the most US public companies are incorporated.
The Court of Chancery is known as a court of equity, rather than a court of law, because it allows for more flexible resolutions than the law formally provides and is known for its expertise in corporate law issues.
Wachtell Lipton has a stellar reputation for its corporate legal work where It defends companies in lawsuits over matters such as breach of fiduciary duty and broken merger agreements, including defending Musk in a shareholder lawsuit brought in Delaware by Tesla shareholders who alleged that he had improperly financial supported his company SolarCity when Tesla acquired the clean energy company in 2017.
Musk was represented by prestigious Big Law leader Cravath, Swaine & Moore in the 2021 trial.
The Twitter Legal Battle
The question is whether Musk will be legally compelled to stick with his deal to buy Twitter or be allowed to back out, possibly by paying a 10-figure penalty.
His contract with Twitter allows him to break off his deal by paying a $1 billion fee, but only under very specific circumstances, such as losing debt financing. The deal between Musk and Twitter also requires Twitter to provide data that Musk may require to complete the transaction.
Many legal experts say Twitter has the upper hand, partly because Musk had attached some conditions to his agreement and because Twitter, which has seen its share price punished as a result of the debacle, is determined to force through the deal.
But Musk’s apparently cavalier approach and his brinksmanship can never be easily categorized in terms of what the outcome may be.
His lawyers on the case are Mike Ringler, (left) a partner at Skadden, Arps, Slate, Meagher & Flom where partner Mike Ringler is acting.
Ringler told Twitter last week that his client was abandoning the takeover, saying that Twitter had violated the agreement with Musk by not providing him with detailed information about how it measures inauthentic accounts. He also said that Musk did not believe the metrics that Twitter has publicly disclosed about how many of its users were fake.