Twitter Inc. (NYSE:TWTR) slightly dropped 0.84% in pre trading session on Wednesday after the Tesla CEO Elon Musk received approval from shareholders on September 13 to purchase the social networking site and take it private, but the transaction might yet fall apart in a court battle this fall.
Shareholders approved Musk’s $44 billion proposal, despite his attempts to back out of the transaction. Twitter has sued Musk for breach of contract, setting up a five-day trial in Delaware Chancery Court on Oct. 17 unless the two parties find a resolution before then.
Musk has questioned the quantity of false accounts on Twitter, stating that the firm was not as forthcoming with the information. According to Twitter, less than 5% of monetizable daily active users were either phony or spam. The business stated that it gave Musk with sufficient data and details to satisfy the criteria of the transaction.
Musk sought to defend his controversial purchase of the social networking business with whistleblower charges. On September 6, Chancellor Kathaleen McCormick of the Delaware Chancery approved his motion.
Chancellor McCormick wrote “Twitter has represented that the anticipated risk of harm has materialized over the course of this litigation. Twitter ‘has suffered increased employee attrition’ which ‘undermines the company’s ability to pursue its operation goals.”
During the hearing, Musk’s request to postpone the October trial was refused. On April 14, he made a takeover attempt for Twitter at $54.20 per share, a 38% premium to the company’s stock price.
Twitter’s board subsequently agreed to implement a poison pill that would allow current shareholders to purchase shares at a discount, but by April 25, the business had changed its mind and accepted Musk’s offer.
Musk was happy with the board’s decision and attempted to seek outside finance for the proposed purchase, as Tesla shares represented the majority of his net wealth.
On May 26, he said that he has closed down his margin loans tied to Tesla Inc. (NASDAQ:TSLA) shares in order to reassure shareholders and investors. Musk has reportedly promised an additional $6.25 billion in stock to fund the transaction.