‘we would have a situation where they could put him in jail’
It has been suggested that Elon Musk could potentially face jail time for backing out of his impending acquisition of Twitter on Friday, July 8.
The 51-year-old billionaire claimed that he would walk away from the $44bn buyout if the social media giant failed to provide adequate information about bots on the platform – something he was keen to eradicate were he to take over.
Current chairman Bret Taylor tweeted that the board intend to conclude the transaction successfully and enforce his merger agreement through legal action with the Delaware Court of Chancery. Moreover, CNBC host and financial journalist David Faber claims the billionaire “may face jail time” if he refuses to follow through on the purchase.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
Speaking on Squawk on the Street, a stock market news and analysis show on Monday, Faber said: “There’s no way they’re [Twitter] going to take the walkaway fee. They have specific performance in the contract. They are going to have a Delaware judge enforce that contract and say, these are the reasons why”.
He went on to note that while they cannot physically force him to buy the company as intended, he now has a legal and contractual obligation to do so and should he fail to fulfil it, “we would have a situation where they could put him in jail.”
While his co-host Carl Quintanilla laughed at the notion of sending the world’s richest person to prison, Faber remarked: ‘This is a man who doesn’t play by the rules.” In fact, Musk has been following specific SEC (Securities & Exchange Commission) rules since this deal began, having been hit with a class-action lawsuit after failing to officially declare his initial shares back in April.
Fellow presenter Jim Cramer went on to say that he thinks the most likely scenario is that the company receive a “price cut” but that “the board is in trouble if they just get that walkway fee”, estimated to be just $1bn – ie just one 44th of the amount they thought they were supposed to be getting. The stock price has already fallen after Musk said he was pulling out of the deal.
Musk continues to defend his decision to walk away from the deal, having previously criticised Twitter for refusing to “disclose bot info” even before pulling out entirely. His plans included full human account authentication, an edit button for tweets and the restoration of a “free speech [online] town square”.
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