Twitter sues Elon Musk to enforce $44 billion buyout Transcript

Speaker 1: (00:04) Twitter is not going away quietly when it comes to Elon Musk, the social media company is now as expected, suing the billionaire to try to force him to actually go through with the $44 billion buyout. Twitter said it, "Bend over backwards to get Musk the information he had requested." It also claims Musk only pulled out because of the downturn in the markets. Here to break down the latest developments in the saga, Yahoo Finances Senior Legal Reporter, Alexis Keenan. Alexis, this filing, the suit was interesting reading. I mean, my TLDR of it is they basically accuse him of lying, but maybe not in so many words. Yes, and then some. Alexis Keenan: (00:40) Yeah. So here's the nutshell version of the complaint. Twitter is saying that Musk basically has buyer's remorse now and no longer wants this company and is trying to weasel out of it. They also say that they negotiated a seller friendly contract that is not to Musk's favor and that that's what it is, that he's going to have to live with that. They finally say that Musk has multiple contract violations already. How? They say that he's been disparaging the company, driving its stock price down. They say that he also accumulated stock in secret, so much so that he should have been reporting it to the SEC and didn't. And they also alleged that he has failed to keep the company updated as to his financing milestones that were required in order to back up his side of the deal. So, we have some central questions in this complaint. Alexis Keenan: (01:30) These are the things that the parties are going to ultimately litigate over. The first question is under the contract, did Twitter have to share information that Musk wants about the number and percentage prevalence of fake accounts on the platform? Does he have the right to get that in his hands and analyze it for his own purposes? To that point, here's what the complaint says. Here's how Twitter puts its argument, they say "Musk announced in an April 21st securities filing that his offer was no longer conditioned on financing or subject to due diligence." Then on April 24th, they say "Musk's counsel sent over a draft agreement, reiterated that Musk's offer was not contingent on any due diligence." So, the company there pointing to the intent of the parties, trying to tell the court this is what was being negotiated. This is how we got to the final deal. So, that is going to be very important as the court looks at this issue. Speaker 3: (02:28) Alexis, the average person out there help us explain the Delaware Courts. How does it work? How- Speaker 1: (02:32) Chancery, what the heck's a chancery? Speaker 3: (02:33) What is that? How fast might this go? Because this has great implications on the stock price of course. I would argue it's in Twitter's best interest to get this done quick as possible, either get your breakup fee or get the deal done. Alexis Keenan: (02:44) Right. So, the Chancery Court is a sophisticated court in terms of business matters because it's handling disputes day in, day out, hundreds, thousands per year, between billionaires, major corporations, multinationals, they know about mergers and acquisitions. So, these judges are not going to be fooled by what's in the contract. They're going to look at the contract and be very capable at distilling ultimately what the parties intended here, we hope. But the Chancery Court has its history back pre US. It goes back to the King's Court in England and it is intended as a court of equity. It's a place where you can go when the law is, as they say sometimes an ass. I don't know if I can say that. Speaker 3: (03:29) You're streaming. You can say it. You're fine. Alexis Keenan: (03:31) So, it is intended to give relief where sometimes even monetary relief won't do the job. For instance, specific performance here. When you need a party to go through with a transaction, as Twitter is saying, it wants Musk to do, well that can't really be done necessarily with dollars and cents all together. They need to force him to take an action. So, these courts eventually in the US were merged equity and law, but matters of law sometimes don't work as one might think is equitable. You can think of, for instance, a mom of five children going into steal from Walmart let's say, and it's to feed her children. And otherwise has no access to be able to do that. Alexis Keenan: (04:13) Well, an equity court might say, "well, okay we know that was illegal, but we're going to find some equity here" and we're going to say in this instance, it's okay, that happened. Let's say the state, for example, prohibited Walmart from making an offer, that would be reasonable to that woman. So, that's a long story. But bottom line is the court has a little bit more liberty to apply rationale beyond just what the letter of the law says. Nonetheless, there is strong jurisprudence about how they come to those decisions and they are matters of law combined with equity. Speaker 4: (04:52) That's that's a great breakdown. Speaker 1: (04:53) Really interesting. Speaker 3: (04:55) Really good. Speaker 4: (04:55) Never understood that or heard that before, but appreciate it so much here. Alexis Keenan and Yahoo Finances own, helping us keep tabs on all thing Musk and Twitter, and what's taking place here. Alexis Keenan: (05:05) We're trying.