LEGAL ENGLISH IN THE NEWS -CAN ELON MUSK REALLY WALK AWAY FROM $44BN TWITTER TAKEOVER?

Elon Musk notified Twitter on Fiday, 8 July, 2022, that he was walking away (lezár a tranzakciót befejezetlenül, „lelép”) from an agreed $44bn (£36.6bn) takeover. The move sets the stage for a legal battle between the world’s richest man and the social media platform.

Why is Musk walking away?

The core of Musk’s case centres on his belief that the number of spam bot accounts on Twitter’s platform is much higher than the company’s assertion (kijelentés, állítás)  of fewer than 5% of its daily active users.

“Mr Musk is terminating the merger agreement because Twitter is in material breach (súlyos szerződésszegés) of multiple provisions of that agreement, appears to have made false and misleading representations (félrevezető kijelentések) upon which Mr Musk relied when entering into the merger agreement, and is likely to suffer a Company Material Adverse Effect (cég értékét érintő lényeges hátrányos hatások),” wrote lawyers for Musk to Twitter.

How strong is Musk’s case?

The merger agreement contains a clause (6.4) stating that Twitter must provide Musk with all data and information that the multibillionaire requests “for any reasonable business purpose related to the consummation (teljesítés, zárás) of the transaction”. This is a covenant (egyoldalú kötelezettségvállalás)  in the deal and a breach (szegés) of it would allow Musk to walk away without sanction.

But legal experts have questioned whether failure (mulasztás) to provide more than has already been shared by Twitter regarding its bot count would breach the covenant. The agreement uses the word “reasonable” a lot when laying out what information requests are acceptable.

“The agreement doesn’t give him the right to receive any information, for any reason,” said Brian Quinn, an associate professor at Boston College law school. “He is going to bear a burden of proving (viseli a bizonyítás terhét) to the court that he had legitimate need for the information and that his requests were reasonable. He can’t use unreasonable information requests to create a pretext (ürügy, kifogás) to claim a violation.”

[…]

Does Musk have any other legal arguments?

His lawyers also argue Twitter broke the merger agreement by failing to seek Musk’s consent (hozzájárulását kéri) when it fired two executives and laid off (elbocsátás) a third of its talent acquisition team (or HR department). This might seem a narrow basis for terminating a deal (megszünteti a megállapodást), but the agreement states (clause 6.1) that Musk must be told when Twitter is deviating from (eltér)  its obligation to conduct its business in the ordinary course (a szokásos üzletmenet keretében folytatja üzleti tevékenységét) and must “preserve substantially intact (érintetlen, sértetlen) the material components of its current business organisation.”

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Alternatively, Musk could try to go down the financing route. The specific performance clause (9.9) requires that the debt financing underpinning (alátámaszt, megerősít) a substantial (jelentős, nagymértékű) chunk of the deal “has been funded or will be funded at the closing (záráskor)”. However, the banks’ $13bn funding commitment (finanszirozási kötelezettségvállalás) is also covered by a legal agreement, so Twitter can be expected to consider its legal options if Musk’s banks try to pull out (kilép, kivonul).

What are Twitter’s options?

The Twitter chair, Bret Taylor, said on Friday the company would “pursue legal action (jogi eljárást indít) to enforce (érvényesít, kikényszerít) the merger agreement”. If he does, the case will be heard in Delaware, the US state that has jurisdiction over (hatáskör, joghatóság) the deal.

Quinn said he expected Twitter to file for a declaratory judgment (valamilyen tényt megállapító bírósági hatérozat)that it was not in violation of the agreement and that Musk could not just walk away.

Experts also expect Twitter to seek an order (végzés) from the court that Musk specifically perform his obligations under the agreement – in other words that he buy the company. This is known as “specific performance.” (a szerződés pontos teljesítését elrendelő határozat)

[…]

The company also has the option of seeking a $1bn break fee ˙(bánatpénz) from Musk as per the agreement, instead of forcing him to buy it.

Is a settlement (megállapodás) possible?

If Twitter wins its case, it could be forcing the world’s richest man to buy a business he doesn’t want.

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There is also the possibility that if Musk finds he still wants to own Twitter, but is worried about overpaying, both sides agree a lower price. However, Twitter’s institutional shareholders (jogi személy részvényes) may push back against that.

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Forrás: https://www.theguardian.com/technology/2022/jul/10/can-elon-musk-really-walk-away-from-44bn-twitter-takeover

VO C A B U L A R Y

assertion – kijelentés, állítás

at the closing – záráskor

to bear a burden of proving – viseli a bizonyítás terhét

breach – szegés

break fee – bánatpénz

Company Material Adverse Effect – a cég értékét érintő lényeges hátrányos hatások

to conduct its business in the ordinary course – a szokásos üzletmenet keretében folytatja üzleti tevékenységét

consummation – teljesítés, zárás

covenant – egyoldalú kötelezettségvállalás

to creat a pretext –ürügyet / kifogást gyárt

declaratory judgment – valamilyen tényt megállapító bírósági határozat

to enforce – érvényesít, kikényszerít

failure – mulasztás

funding commitment – finanszirozási kötelezettségvállalás

institutional shareholders – jogi személy részvényes

intact – érintetlen, sértetlen

jurisdiction – hatáskör, joghatóság.

to lay off – elbocsát munkavállalót

material breach – súlyos szerződésszegés

misleading representation – félrevezető kijelentés

order – végzés

to pull out – kilép, kivonul

to pursue legal action – pert indít, jogi eljárást foganatosít

to seek consent – hozzájárulást kér

settlement (out-of-court)- megállapodás (peren kívül)

specific performance – a szerződés pontos teljesítését elrendelő határozat

substantial – jelentős, nagymértékű

to terminate a deal – megszünteti a megállapodást / egyezséget

to underpin – alátámaszt, megerősít

to walk away – lezár a tranzakciót befejezetlenül, „lelép”