Explainer- Can Elon Musk defy a court if ordered to buy Twitter?
Twitter Inc has sued Elon Musk to force him to go through with the $44 billion acquisition of the social media company. What happens if Twitter succeeds and the world's richest man, who regularly taunts securities regulators, refuses to comply with the court order?
CAN A COURT ORDER MUSK TO BUY TWITTER?
Twitter is asking a Delaware court to grant "specific performance" under the terms of its contract with Musk - in other words, force him to complete the acquisition at the agreed price of $54.20 a share.
The court has issued such orders before. Chicken processor Tyson Foods Inc was ordered in 2001 to complete its $3.2 billion deal for meatpacker IBP Inc. Last year the court ordered private equity firm Kohlberg & Co LLC to close its $550 million purchase of DecoPac Holding Inc, which makes cake decorating products.
But the buyers in these instances were companies rather than an individual. Never has such specific performance been granted on a deal of this scale.
WHAT IF MUSK RESISTS?
The legal battle between Musk and Twitter will play out in Delaware's Court of Chancery, which is specified in the merger agreement for disputes.
Delaware is also a popular incorporation destination for most U.S. public companies, including Tesla Inc and other Musk companies such as tunneling venture the Boring Co and Space Exploration Technologies Corp, known as SpaceX.
That gives the court jurisdiction over a vast amount of Musk assets to coerce compliance if needed. Lawyers said the court would begin by holding Musk in contempt and issuing fines until he did as ordered.
"The court has capacious powers to enforce its orders," said Francis Pileggi, an attorney with Lewis Brisbois in Wilmington, Delaware.
If Musk continued to ignore a judgment, the
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