Musk’s withdrawal from the $44 billion twitter buyout deal, twitters non- disclosure of bots and fake accounts, drop in Twitter’s stock prices by 11%, Twitter suing Musk: the Musk- Twitter Saga is taking some dire turns.
It all started in the April of 2022 when the richest man on Earth and also one of the most followed twitter users, Elon Musk proposed a $44 billion bid to purchase Twitter Inc. Musk offered to buy all the shares of Twitter for $54.20 each which was around $10 more than its then trading price per share. Upon acquiring ownership, he had plans to relax the restrictions on content posted on twitter, reduce and eliminate fake accounts, and move away from the advertising based revenue model that the company follows.
Although Musk strongly believed that he could take Twitter to different heights and that the billion dollar company had potential to grow even further, he decided to pull out of the $44 billion buyout deal when Twitter did not provide him with certain necessary information. Elon Musk, who is the second largest individual stakeholder of Twitter demanded that the social media site provide him with usable and concrete data regarding bots and fake accounts on the platform. He considered the “process for auditing the inclusion of spam and fake accounts” to be vital for the company’s further business under him. But since Twitter refused to provide the same, Musk backed out of the deal.
Upon realizing how the deal shall benefit the company greatly, Twitter decided to ensure that Elon ends up buying the company while stated that his termination of the buyout is ‘invalid and wrongful’. Bret Taylor (Chair of board, Twitter) stated in a tweet that:
“The Twitter board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement”.
Twitter faces damages due to the termination of the deal
The social media company claimed that Musk’s termination of the deal negatively affected the Twitter’s share and the company itself to a great extent. The damage is evident as the stock prices of Twitter have fallen by 11 percent to one of their lowest points since the past few years. The decline in share prices is a result of investors worrying the approaching legal battle. The company also claimed that the share price offered by Musk was the best that it could gain and it is otherwise unachievable.
The initiation of a legal battle
To make Musk pay for the repercussions and to get him to abide by his buyout deal, Twitter assembled a legal team with leading law firm Wachtell, Lipton, Rosen and Kazs to sue the avid twitter user. Sources claim that if Musk loses the trial, he may have to pay a fine of $1 billion as a deal brokerage penalty to Twitter.
Musk’s response to the legal action raised against him
After cancelling his buyout deal, Musk remained rather silent at first when Twitter made insolent comments about him. But he soon responded with a meme of himself, mocking Twitter Inc.
Musk was open to buying the company at a lower than proposed share price while making the compromise of not receiving the information on bots and fake account as desired, but Twitter gave him very low margins to do so and henceforth the deal got terminated. As of the legal trial, Musk seems to not be much bothered considering his mockery of the plaintiff’s move to go to trial.
Can the courts force Musk to buy Twitter against his will?
Twitter is adamant on getting Elon Musk to buy the company and as this case is taken to court, the reputed social media agency is confident that it shall win the trial against Musk in the Delaware Court of Chancery. Expert analysts have stated that it is possible that as per the legal terms mentioned in the deal’s document such as “specific performance”, Twitter may win the trial and get Musk to honor the original deal, however, this is not a surety as there are other possible outcomes.
Possible outcomes of the Elon Musk vs Twitter court trial
Here are the possible outcomes of the court trial initiated by Twitter Inc. against Elon Musk:
- The deal gets terminated and Musk pays a breakup penalty fee of $1 billion.
- Twitter wins the trial and Musk is forced to purchase the company for $44 billion.
- Elon musk wins the trial and walk free with paying the breakup fee.
- The two parties enter a settlement and the company is bought at a lower price.
- An unrealistic yet possible outcome of a new entity buying Twitter at the share price equivalent to or higher than $54.20 per share.
Whatever may be the possible outcome, Elon Musk may even change his mind and just buy Twitter for all we know, but it is a known fact that Twitter is not going down without putting up a good fight.
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