Elon Musk could not be avoided Monday morning. After announcing the end of his takeover of Twitter for $ 44 billion, he grabbed the platform he no longer wants to buy and scoffed at his likely legal response.
Musk’s tweet to his 100 million followers said, “They want to force me to buy Twitter in court.” In fact, Twitter has reason to request an order requiring Musk to buy the business, despite being withdrawn in a dispute over the number of spam or bot accounts on the platform.
But, as has often happened with the deal itself, the richest man in the world doesn’t seem to take the threat seriously. “Now they have to reveal the bot’s information to the courts,” says a tweet caption, illustrated by a series of photos of Musk laughing out loud. It was followed by an image of vintage action star Chuck Norris on a chessboard, with Musk tweeting below: “Chuckmate.”
Despite being surrounded by the best advisors money can buy, Musk has had an erratic relationship to the legal details of his now-abandoned $ 44 billion (£ 37 billion) Twitter takeover. On the one hand, his legal team has presented some highly argued revelations against the agreement, citing several clauses of the agreement. On the other hand, he publishes poop emojis to the people he is negotiating with.
In fact, the eschatological caricature aimed at Twitter CEO Parag Agrawal probably broke a merger deal that Musk has now renounced. More than two months ago, Musk signed an agreement to buy the social media platform that contained a clause in which he pledged not to “undermine” the company or its employees.
A day later, Musk engaged in criticism of the company’s staff on the platform, including Twitter legal manager Vijaya Gadde. Former Twitter CEO Dick Costolo accused Musk of harassing Gadde.
What is happening? You’re making a company executive who just bought the target of harassment and threats.
– dick costolo (@dickc) April 27, 2022
It was the first sign that Musk was not taking the deal seriously, or at least was unwilling to curb his behavior in accordance with the deal agreement. It probably didn’t surprise Twitter, given the clause inserted in the deal and Musk’s previous story on Twitter. In 2018, Musk reached an agreement with the U.S. financial control body through a tweet in which he said he had “secured funding” for a proposal to take Tesla out of the stock market.
According to a legal expert, Musk’s behavior violated the deal, but Twitter’s desire to make the deal nullified his concerns. “Yes, some of his tweets breached the deal, but there’s no real remedy here because it doesn’t matter how Musk despises Twitter. They want to make that deal,” said Brian Quinn, an associate professor at Boston College of Law School.
Twitter has said it will go to court in Delaware, the U.S. state that has jurisdiction over the agreement, to “enforce the merger agreement.” His options include asking Musk for a $ 1 million rest commission or asking a judge for “specific performance,” which means requiring Musk to move forward with the agreed-upon transaction at $ 54.20 per share. Musk certainly boasts that Twitter will choose the latter.
Musk seemed to take the purchase of the business seriously when news of his offer came out on April 14, even if the $ 54.20 price hinted at a weed joke, given that “420” is slang. for marijuana. The billionaire said he wanted to unleash the platform’s “extraordinary potential” to boost freedom of expression and democracy around the world. He said at a TED conference: “Having a massively trusted and widely inclusive public platform is extremely important for the future of civilization.”
While it was clear that Musk was heading for the exit, he met with Twitter staff in a question and answer where he said he wanted the platform to contribute to a “better and lasting civilization.” He was also interested enough in the business to put together a financing package that included $ 13 billion from banks and a commitment of more than $ 30 billion from his own pocket, although it included contributions from Binance cryptocurrency trading platform and technology mogul Larry Ellison.
However, his cold and hot behavior has led some observers to wonder how serious it was to buy the company. If he intended to buy the company at first, a recent defeat in technology stocks helped change his mind, said Drew Pascarella, a tenured professor of finance at Cornell University.
“Elon is a bold and controversial public figure. Twitter is a platinum social networking platform that Elon himself has used, controversially, for years. Acquiring the asset and the ability to control it is the definitive move. from the head, “says Drew. “I think Elon was serious, and the banks thought so too. Given what has happened to equity securities since the deal was signed, he risked looking very stupid paying what now it’s a weird price. “
Shares of Twitter, which fell 6.5% when trading opened in New York on Monday at $ 34.46, have fallen by about 20% so far this year and can be expected to fall even further if Musk comes out completely. The highly technological Nasdaq index gives an idea of the broader market, which has fallen 25% so far this year.
Musk’s lawyers are among the few legal voices who believe he has a chance in Delaware. His argument focuses on the veracity of Twitter’s statement in its quarterly documents that spam accounts account for less than 5% of its daily active user base, which currently stands at 229 million people. Twitter has been steadily claiming this since 2014 and has provided Musk with public tweet data to try to convince him that his estimate is robust.
Musk’s argument for breaking the deal is threefold: that Twitter had breached the deal by not providing enough information about spam accounts; that Twitter has misrepresented the number of spam accounts in its communications to the U.S. financial control body; and that the company breached the agreement by failing to consult with Musk when it recently laid off senior employees.
Quinn, and others, think Musk will not succeed. “Does Musk have strong legal arguments? In short, no,” Quinn says. Lawyers who do not sympathize with Musk’s case say his requests for information were unreasonable, that he is very unlikely to be able to prove that the spam estimate is false and that dropping senior executives was part of it. from the day to day running of the company.
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However, some legal and corporate experts also believe that both sides will reach an agreement to avoid a situation where Musk is forced to buy a company he doesn’t want, amid a legal battle that further harms morale and the price of the shares of the company. company.
Whatever happens next, anyone who sells a business in Musk in the future is likely to be cautious, according to Anat Alon-Beck, a professor and business law expert at Case Western Reserve University. “I definitely think their behavior will make it very difficult to buy other companies,” he said.
However, Pascarella said companies would still notice when a businessman with a $ 220 billion fortune comes calling. “No council should ignore the proposals of the world’s richest person just because of their erratic behavior,” he said, although companies should “negotiate for clear and solid protections”.
Twitter is about to discover how robust its protections are. Meanwhile, Musk will no doubt continue to tweet on a platform he now prefers to use than own.