If Mr. Musk successfully disengages from Twitter, it could be disastrous for the company. Its shares have fallen more than 35 percent below its offer of $ 54.20 per share. The Twitter business has also deteriorated in recent months. In May, Parag Agrawal, chief executive of Twitter, said in a note to employees that the company had failed to meet its business and financial goals.
Now that Twitter has sued, it is expected that Mr. Musk and his lawyers respond. While the timeline beyond that depends on many factors, the company and Mr. Musk will likely be summoned to a hearing in Delaware and will go through the discovery process, with both parties unearthing facts they believe are relevant to the case.
The case can then go to trial, although there is a possibility that the judge assigned to the case will dismiss Mr. Musk to leave. If the lawsuit goes to trial, the judge will decide whether the Twitter revelations were insufficient and caused material damage to the settlement.
In the past, the Delaware cancellation court has prevented companies from trying to get away from the agreements. In 2001, for example, when Tyson Foods attempted to withdraw from the acquisition of the IBP meat packer, the court ruled that Tyson had to comply with the agreement. In situations where the court has allowed buyers to leave, it has forced them to pay damages. According to most readings of the Twitter contract with Mr. Musk, the damage would be limited to $ 1 billion.
Twitter and Mr. Musk has assembled legal teams to do just that. Leading Twitter efforts in Delaware is William Savitt, a lawyer for Wachtell, Lipton, Rosen & Katz. Wachtell Lipton is famous, among other things, for developing legal tactics to protect companies from hostile buyers, such as the so-called poison pill that Twitter originally launched to defend itself from Mr. Musk.
Mr. Savitt has experience before the Delaware Chancellery Court and previously defended companies against such as Carl Icahn and Pershing Square, the investment firm run by billionaire William Ackman. But Mr. Musk is unlike any other corporate assailant who preceded him, making him an especially complex opponent.