Twitter shareholders approved Elon Musk's $44 billion offer to take over the world's largest microblogging platform. The shareholder approval came amid a messy court battle between the Twitter board and the Tesla CEO.
Twitter said in a press release that nearly 99 percent of the votes cast by stock owners supported the sale agreement. As per the initial agreement made months ago, Musk would spend $54.20 for every Twitter share.
The Twitter board approved the sale to meet the September 15 deadline for the execution of the deal but it is a mere technicality as the two sides are locked in a court battle. While the board wants Musk to complete acquisition, the tech billionaire wants to exit it.
Twitter and Musk are headed to a trial that starts on October 17 in a Delaware court. The battle went to the court after Musk tried to walk away from the deal to over a misrepresentation of fake accounts on the site. According to Musk, Twitter's alleged misrepresentation of spam account numbers caused a "material adverse effect (MAE)" on the buyout company, which is a breach of the contract. However this argument may not stand in the court as MAE is generally seen as unexpected developments.
Twitter has denied the charges made by Musk from the beginning and it stands by its metrics.
Negotiated Settlement?
Though legal experts believe that the Twitter board's case against Musk is strong, the company might actually prefer a negotiated settlement to a prolonged legal wrangle,
Reuters cited experts saying that Twitter could opt for a renegotiation or settlement. Under the rules in Delaware, where the fight will play out, it is not easy for acquirers to walk away from offers without suffering significant financial losses. However, corporate law experts underline the fact that companies still like to have a renegotiated deal at a lower price instead of a troublesome court battle. Another option is for the companies to accept financial compensation
"The argument for settling at something lower is that litigation is expensive... And this thing is so messy that it might not be worth it," Adam Badawi, a law professor at UC Berkeley, told Reuters.
