Twitter Secures Top US Law Firm, Musk Faces 'Lawsuit of the Century'

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] An unprecedented legal battle between social networking service (SNS) Twitter and Elon Musk, CEO of Tesla, is expected to begin as early as the 11th (local time). Three months after Musk CEO signed a $44 billion (about 57 trillion won) Twitter acquisition deal, he declared the contract void, prompting Twitter to immediately sign with a major law firm and prepare for litigation.

On the 10th, Bloomberg News reported, citing sources, that Twitter signed a contract with Wachtell, Lipton, Rosen & Katz, a law firm specializing in mergers and acquisitions (M&A) law. Wachtell is known as the top U.S. law firm in the M&A field. Notably, the firm includes a lawyer who previously served as the Chancellor of the Delaware Court of Chancery, where the legal battle between Twitter and Musk CEO is expected to take place. Since Twitter has declared it will promptly file a lawsuit, the litigation is likely to begin on the 11th.

Earlier, on the 8th, Musk CEO declared the contract void, stating that "Twitter has materially breached several provisions of the acquisition agreement." He claimed that Twitter failed to comply with contractual obligations regarding the provision of fake account data and did not seek consent for changes in business operations such as employee layoffs. Twitter immediately pushed back, responding that it would file a lawsuit to enforce the acquisition agreement.

According to the contract terms, Musk CEO must pay a $1 billion penalty for this termination declaration. However, foreign media analyzed that the penalty applies only if the acquisition financing fails or regulatory authorities block the acquisition, and may not apply if Musk CEO unilaterally declares termination. If the lawsuit proceeds, the court is expected to make a ruling on this matter as well.

The Wall Street Journal (WSJ) described this as "Twitter and Musk CEO preparing for an unprecedented legal dispute." WSJ added that while such cases have occurred in small-scale deals, there is no precedent for such a dispute arising from a deal of this magnitude.

Corporate law experts believe that since Musk CEO has not yet provided reasons or supporting evidence for terminating the contract, Twitter currently holds a more advantageous position. However, WSJ reported that there remains doubt about whether it is even possible to force Musk CEO, who has so far avoided legal troubles, to comply with the contract.

Meanwhile, Twitter faces added uncertainty with a prolonged legal battle against Musk CEO amid an already difficult market environment. With growing concerns about a recession, the enthusiasm in the online advertising market?which accounts for 90% of Twitter’s revenue?is expected to cool, and internal turmoil is likely to deepen.

This content was produced with the assistance of AI translation services.