While he initially expressed his interest in firing some 75% of the 7500 Twitter staffers, he then backtracked from it. However, immediately after taking the platform over, he fired three top officials, CEO Parag Agarwal, head of legal policy, trust and safety Vijaya Gadde and Chief Financial Officer Ned Segal.

Parag Agarwal and Ned Segal were in Twitter’s San Francisco headquarters when the deal closed and after that, after which both were escorted out.

While Elon Musk has control over the influential social media platform with more than 230 million users, he reportedly visited the company’s headquarters on Wednesday ahead of the deal signing and will speak to the employees again on Friday, amid confusion and low morale within the San Francisco premises over the past few weeks’ developments.

Despite claiming that he has bought the company “to help the humanity” and the “bird is freed”, Musk, the self-professed “free speech absolutist” faces a massive challenge in form of the Twitter’s growing debt, along with activists’ apprehensions about the billionaire’s plans of loosening the content moderation rules ahead of the midterm elections in the United States.

While the company stares at an uncertain future, let’s have a brief look over the profiles of Parag Agarwal and Vijaya Gadde, who clashed with Elon Musk in 2022 May and are now handed the axe.

Parag Agarwal, the 38-year-old Indian-American software engineer, was born in Rajasthan’s Ajmer in 1984. While his father served in the Government of India’s Department of Atomic Energy, his mother taught economics at Mumbai’s Veermata Jijabai Technological Institute.

Parag Agarwal completed his higher secondary education in 2001 at Mumbai’s Atomic Energy Junior College and hit the headlines in the same year by winning a gold medal in the International Physics Olympiad held in Turkey. He completed his BTech from IIT Bombay in 2005 and got admitted to US-based Stanford University to pursue a Ph.D. in computer science. In 2012, he published his doctoral thesis called “Incorporating Uncertainty in Data Management and Integration”.

He held research internships at the research departments of Microsoft and Yahoo before joining Twitter as a software engineer in 2011. In 2017, he became the company’s Chief Technology Officer. His biggest break came in 2019, when the micro-blogging platform’s CEO Jack Dorsey announced that Parag Agarwal will lead “Project Bluesky”, aimed to develop a decentralized social network protocol.

Parag Agarwal replaced Jack Dorsey as the Twitter CEO in 2021, with annual and stock compensations worth $13.5 million. Parag Agrawal’s wife Vineeta is a general partner at the venture capital firm Andreessen Horowitz. He hit headlines again for taking paternity leave as a business CEO.

Parag Agrawal now will get $42 million from the social media firm as compensation, since he has been fired from his post within 12 months of the change of leadership.

In Elon Musk’s leaked chats, the Tesla CEO called the Parag Agarwal-led Twitter management incompetent. He even mocked, berated and questioned Parag Agrawal’s leadership skills as the 38-year-old reportedly went for a Hawaii trip, during the stalemate over the $44 billion acquisition deal. In one such chat with Parag Agrawal, Elon Musk said that joining the Twitter board will be a “waste of time” for him.

Meanwhile, 48-year-old Vijaya Gadde is an American attorney. Her role in Twitter was handling issues like harassment, misinformation, and harmful speech. She took an active role in forming the micro-blogging platform’s policies on such issues. During her reign, Twitter got involved in rows such as suspending the New York Post’s official account for publishing an unfavorable story on Joe Biden’s son Hunter ahead of the 2020 presidential elections.

Vijaya Gadde received a BSc degree from the Cornell University School of Industrial and Labour Relations, along with a Juris Doctor from the New York University School of Law in the year 2000.

Before joining Twitter in 2011, she worked at the Silicon Valley law firm Wilson Sonsini Goodrich & Rosati, apart from serving as the senior director in the legal department of technology firm Juniper Networks. As a WSGR official, Gadde worked on the 2006 $4.1 billion McClatchy Co.-Knight Ridder Inc. acquisition.

Fortune magazine 2014 termed her the most powerful woman on Twitter’s executive team in the year 2014. Ahead of US polls, Politico called her “the most powerful technology executive you’ve never heard of”.

She got in another row in 2018, while joining the then Twitter CEO Jack Dorsey for meetings in India, where they had outreach activities with prominent Dalit activists. There, the guests gave Jack Dorsey a signboard reading reading “Smash Brahminical Patriarchy,” As the image got viral on Twitter, both Jack Dorsey and Vijaya Gadde faced online heat. She apologised later for it.

In 2019 she convinced Jack Dorsey not to sell political advertisements ahead of the US Presidential Elections. In 2021, she was reportedly involved in the process of suspending the official account of former US President Donald Trump, post the Capitol Riots.

When Elon Musk questioned Twitter policies, he also criticised Vijaya Gadde’s move to ban New York Post on the micro-blogging platform for publishing the Hunter Bidden story. Vijaya Gadde, in return, expressed her reservations over Elon Musk’s Twitter takeover. After being criticised by the Tesla CEO, she received online abuse and racial slurs. While there were concerns over Elon Musk’s comments on Vijaya Gadde may have broken the acquisition agreement terms, he found support from the US right-wingers, who accused the Twitter legal policy head of being an online censorship advocate.

Another top gun to face the axe was Ned Segal, who is Twitter’s Chief Financial Officer. He was leading the company’s finance functions along with Corporate Development and Partnerships at the time of his firing. Unlike Parag Agrawal and Vijaya Gadde, he was not in direct confrontation with Elon Musk, but he stuck with the Twitter leadership during the six-and-a-half-month legal tussle with the Tesla CEO over the micro-blogging platform’s takeover terms.

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When Jack Dorsey was questioned about whether Twitter turned out the way he had envisioned, he said, “The biggest issue and my biggest regret is that it became a company.”

When asked what organisational structure he preferred for Twitter, Jack Dorsey responded that it ought to be “a protocol” and that Twitter shouldn’t be controlled by either the government or another business.

If Twitter were a protocol, it would function much like email, which is decentralized and allows users of various email providers to connect with one another.

If the deal to sell Twitter to billionaire Elon Musk had been successful, Jack Dorsey would have received USD 978 million.

According to a court document, Twitter filed a lawsuit against Elon Musk for breaking the terms of the $44 billion agreement to buy the social media platform and asked a Delaware court to order the world’s richest man to complete the merger at the agreed $54.20 per Twitter share.

“Elon Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” said the lawsuit.

According to the statement, Elon Musk entered into a legally binding arrangement in April of this year and is ending it because “it no longer serves his personal interests.”

The lawsuit accused Elon Musk of “a long list” of violations of the merger agreement that “has cast a pall over Twitter and its business.”

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Musk had announced his plans to terminate the deal, citing three reasons behind his decision. Firstly, Musk’s attorneys accuse Twitter of fraudulently under-reporting the number of spam/fake accounts. Twitter replied that it did not share additional information with Musk regarding spam accounts because it feared he would build a competing platform after abandoning the acquisition.

Secondly, Musk’s lawyers alleged that the platform failed to provide the required data and information he had requested. As the contract said that Twitter must provide reasonable access to its properties, books, and records.

Lastly, Musk’s attorneys stated that Twitter did not comply with a contract term that required the company to get his consent before deviating from its ordinary course of business.

Musk cites Twitter’s decision to fire two “high ranking” employees, lay off a third of its talent acquisition team, and institute a general hiring freeze as examples of decisions made without consulting him.

In its lawsuit filed with the Delaware Court of Chancery, Twitter called the reasons cited by Musk a ‘pretext’ that lacked merit and said his decision to walk away had more to do with the decline in the stock market, particularly for tech stocks.

Twitter also accused Musk of ‘secretly’ accumulating shares in the company between January and March without properly disclosing his substantial purchases to regulators, and said he “instead kept amassing Twitter stock with the market none the wiser.”

Shares of the social media platform closed at $34.06 on Tuesday, up 4.3%, but sharply below the levels of $50 where it traded when the deal was accepted by Twitter’s board in late April. The stock added another 1% after the bell.

The Delaware Court of Chancery, a non-jury court that primarily hears corporate cases based on shareholder lawsuits and other internal affairs, has ruled on a number of cases where a company cited the specific performance clause to force a sale.

None were nearly as large as Musk’s Twitter deal — $44 billion — and the details underpinning them differ as well.

Still, past cases can provide context for how this Musk-Twitter dispute might end.

IBP vs Tyson Foods

In this 2001 case, Tyson agreed to acquire IBP, a meat distributor, for $30 per share, or $3.2 billion, after winning a bidding war. But when both the businesses suffered, Tyson tried to get out of the deal and argued there were hidden financial problems at IBP.

Judge Leo Strine found no evidence that IBP materially breached the contract and said Tyson simply had “buyer’s regret.”

That didn’t justify calling off a deal, he said.

Strine ruled Tyson had to buy IBP given the contract’s specific performance clause.

Strine wrote, “Specific performance is the decisively preferable remedy for Tyson’s breach, as it is the only method by which to adequately redress the harm threatened to IBP and its stockholders.”

More than 20 years later, Tyson still owns IBP.

The Tyson deal differs in a few key ways, however. Tyson hoped a judge would allow it to walk away from the deal in part because of the significant deterioration of IBP’s business after the agreement was signed.

Musk is arguing false and vague information about spam accounts should allow him to walk.

Also, unlike Tyson’s deal for IBP, Musk’s acquisition of Twitter involves billions of dollars in external financing. It’s unclear how a decision in favour of Twitter would affect potential funding for a deal or whether that could impact closing.

Strine now works at Wachtell, Lipton, Rosen & Katz, the firm Twitter hired to argue its case.

AB Stable v. Maps Hotels and Resorts

In this 2020 case, a South Korean financial services company agreed to buy 15 US hotels from AB Stable, a subsidiary of Anbang Insurance Group, a Chinese company, for $5.8 billion. The deal was signed in September 2019 and scheduled to close in April 2020.

The buyer argued COVID-19 shutdowns caused a material adverse effect on the deal. The seller sued for specific performance.

Judge J. Travis Laster found that hotel shutdowns and dramatic capacity reductions breached the “ordinary course” of the business clause, and ruled that the buyer could get out of the deal.

The Delaware Supreme Court affirmed the decision in 2021.

Tiffany v. LVMH

In another COVID-related case, LVMH originally agreed to buy jewelry maker Tiffany for $16.2 billion in November 2019.

LVMH then attempted to scrap the deal in September 2020 during the pandemic, before it was set to close in November. Tiffany sued for specific performance.

In this case, a judge never issued a ruling, because the two sides agreed to a lowered price to account for the drop in demand during the COVID-induced global economic pullback.

LVMH agreed to pay $15.8 billion for Tiffany in October 2020. The deal closed in January 2021.

Genesco v. Finish Line

Footwear retailer Finish Line initially agreed to buy Genesco for $1.5 billion in June 2007 with a closing date of Dec. 31, 2007.

Finish Line attempted to terminate the deal in September of that year, claiming Genesco “committed securities fraud and fraudulently induced Finish Line to enter into the deal by not providing material information” concerning earnings projections.

As with the Tyson case, the Delaware Chancery Court ruled Genesco had met its obligations and that Finish Line simply had buyer’s remorse for paying too much.

Markets had begun to crash in mid-2007 during the start of the housing and financial crisis.

But rather than going through with the deal, both sides agreed to terminate the transaction, with Finish Line paying Genesco damages.

In March 2008, with the credit market cratering, Finish Line and its primary lender UBS agreed to pay Genesco $175 million, and Genesco received a 12% stake in Finish Line.

Genesco remains an independent publicly traded stock to date. JD Sports Fashion agreed to buy Finish Line for $558 million in 2018.

The post Check out four high-profile cases similar to Twitter vs Musk appeared first on International Finance.

What lawsuit says
“Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” said the lawsuit.

According to the statement, Musk entered into a legally binding arrangement in April of this year and is ending it because “it no longer serves his personal interests.”

The lawsuit accused Musk of “a long list” of violations of the merger agreement that “have cast a pall over Twitter and its business.”

Why Musk canceled the deal
According to Musk, there are mainly three reasons first that Twitter had broken the terms of the agreement by not providing sufficient details regarding spam accounts. Second, Twitter had misrepresented the number of spam accounts in its disclosures to the US financial watchdog and third that the company had broken the agreement by not consulting Musk when firing senior employees recently.

What’s next?
In an effort to quickly resolve its legal matter before the deal’s completion deadline of 24th October, Twitter has asked a Delaware court to set up a four-day trial for its lawsuit in the middle of September. “The facts they marshal in their complaint give them maximum leverage to negotiate should they so wish,” says Brian Quinn, an associate professor at Boston College law school, the Guardian reported.

The post Why Twitter is suing Elon Musk appeared first on International Finance.

In April, the billionaire had announced his intention to buy Twitter for $44 billion but has since been critical of the firm, threatening to put the sale on hold due to concerns over bots, or phony accounts, that exist on the platform.

According to the New York Times, Musk set high objectives for Twitter during the call, stating that the count will increase from 229 million users to one billion users around the world. That’s approximately four times the number of people who use it now.

He has also taken aim at Twitter’s work-from-home policy, calling for the company’s headquarters to be turned into a “homeless refuge” because so few people actually worked there. The remark was also barely a veiled dig at San Francisco, which has a significant homeless population.

In accordance with the New York Times, Musk did little to allay fears about layoffs at Twitter, refusing to directly answer queries about possible restructuring and noting that “right now, costs outweigh income — that’s not a nice situation.”

When he declared he wanted to “verify all humans” on the service, the millionaire businessman caused a stir. He explained at the meeting that this does not mean he wants everyone on Twitter to use their true names, as he does on Facebook because pseudonyms can allow people to openly express their political ideas.

Twitter’s chief executive, Parag Agrawal has also mentioned to his employees about all-hands meetings via email. Employees will be able to submit questions to Musk in advance.

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He said that Twitter is not providing him with the necessary data to facilitate an evaluation of the number of spam accounts there are.

On Monday, a letter to Twitter’s Chief Legal Officer Vijaya Gadde was disclosed in a regulatory filing. Musk’s lawyer Mike Ringler stated that he has a right to the requested data. This information will help further finance the $44 billion deal.

He even said that Musk reserves all rights arising from this material breach of merger agreement duties, including the right not to finalize the acquisition and cancel the merger agreement.

A Twitter spokesperson has said that the company will continue to share the necessary information with Musk to ensure the merger.

Texas Attorney General Ken Paxton announced an investigation into Twitter on Monday, alleging that the business may have falsely reported its bogus bot accounts in violation of the Texas Deceptive Trade Practices Act.

Paxton’s office has demanded documents detailing how Twitter calculates and handles its user data and how that data connects to its advertising businesses. Twitter has until June 27 to reply to Paxton’s demands.

The post Musk threatens to scrap deal as Twitter fails to deliver data appeared first on International Finance.

Following Musk’s remark about putting Twitter on hold, the price of its shares fell in late afternoon trading on May 16 itself.

The stock fell more than 8% to settle at $37.39, lower than when Musk announced his Twitter stake in early April, raising worries about whether the billionaire entrepreneur would complete the deal at the agreed price.

Twitter Chief Executive Officer Parag Agrawal tweeted earlier on May 16 that internal estimates of spam accounts on the social media network for the last four quarters were far under 5%, responding to days of criticism by Musk of the company’s handling of phony accounts.

Twitter’s estimate, which has remained the same since 2013, could not be reproduced externally given the requirement to use both public and private information to evaluate if an account is spam.

Musk responded to Agrawal’s defense of the company’s methodology with a poop emoji on Twitter. In his tweet he wrote, “So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter.”

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