Billionaire Elon Musk's decision to back out of the much-vaunted Twitter takeover deal, three months after announcing that the company had tremendous potential, is all set to turn into a bitter legal battle that could spill over well into the next year.

Last Friday, Musk, in a regulatory filing, said that he was terminating the Twitter deal over what he claimed was a continuous disagreement over the number of spam accounts.

Twitter, meanwhile, has hit back saying it will diligently take all measures required to close the transaction. In a letter addressed to Musk, Twitter termed his abandonment of the deal as "invalid and wrongful".

As was expected, Musk broke his silence on Twitter, taking a snide dig at the company with a meme.

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Speaking to CNBC-TV18, Lauren Hirsch, Reporter — Deal Book at The New York Times said, “Most lawyers that I talk to, from what they have seen publicly at least, believe Twitter has the upper hand by far. Musk is making three main allegations and most people think that none of them hold water. One of the foremost allegations that Musk is making is that Twitter is not giving information that he needs to close the deal, in this case, how it accounts for bots.”

She added, “My expectation is Twitter is going to argue in court that the kinds of requests that Musk has been demanding, particularly around bots, are just a fishing expedition and not necessary. So from a strictly legal point of view, Twitter has the upper hand.”

On re-negotiation, Brian Quinn, Professor at Boston College Law School, said, “There is always room for negotiation. In fact, this kind of situation where parties enter into a contract and then decide — at least the buyer decides — that maybe they have overpaid, and then want to back out of the deal, typically we end up in court. It results in a renegotiation on price, where the deal goes forward, but at a lower price. So it is hard to say that no one wins because if the deal gets done at a price that both parties agree to, clearly, they are at least happy with that kind of result.”

Also Read: Twitter vows to fight back Elon Musk in court as Tesla CEO backs out of $44 billion deal over bot accounts

Dan Ives, MD & Senior Equity Research Analyst at Wedbush Securities, said, “This has been a fiasco and really a nightmare, I would almost call it a worst-case situation for the Twitter management, employee turnover, advertising. I think most importantly, as well, credibility in terms of metrics. You saw the stock now starts to trade on a standalone basis. As Lauren talks about legally Twitter, I think it clearly has the upper hand.”

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First Published:Jul 12, 2022 6:18 PM IST