8 ways the Elon Musk-Twitter saga could end


Elon Musk arrives on the In America: An Anthology of Vogue themed Met Gala on the Metropolitan Museum of Artwork in New York Metropolis, New York, Might 2, 2022.

Andrew Kelly | Reuters

Within the newest twist within the Elon Musk-Twitter saga, the world’s richest man told the social media company he now not intends to purchase it. Twitter chairman Bret Taylor promptly fired back that the corporate intends to go to court docket to implement the $44 billion deal’s closure on the agreed upon value and phrases.

Predicting how the drama will finally conclude is troublesome, particularly with the mercurial dealmaker concerned. However listed here are eight doable situations.

1. Deal ends, Musk pays breakup payment

In idea, this can be the cleanest possibility for everybody — no litigation, Musk agrees to pay the contract’s $1 billion termination payment and Twitter carries on, albeit at a valuation considerably decrease than $44 billion. That is the trail Twitter co-founder Ev Williams appeared to back when he tweeted that he could be asking if “we will simply let this complete ugly episode blow over” if he have been nonetheless on the board.

The issue is the board could possibly be breaching its fiduciary responsibility if it lets Musk stroll − and Taylor’s response suggests Twitter has no intention of doing that.

Twitter also has a strong legal argument that Musk locked himself into shopping for the corporate for $54.20 a share. Permitting him to stroll away after solely paying the breakup payment would in all probability push Twitter’s shares even decrease. They’ve already been trading at a significant discount as traders query if and when a deal will occur. On Friday, the inventory closed at $36.81.

“They can not simply say, ‘Alright, let’s spare us the ache, Elon, we’ll allow you to knock the worth down by $20 per share, or we’ll settle, we’ll comply with stroll away if you happen to simply pay the billion-dollar break payment,” said Ann Lipton, a professor of company governance at Tulane Regulation College. “Twitter is simply not ready to have the ability to try this.”

2. Twitter wins in court docket, Musk buys the corporate

There is no precedent for a choose upholding a so-called “particular efficiency” clause to implement a contract for a deal as giant as $44 billion. However there are examples of judges forcing consumers to shut offers even once they do not wish to.

In 2001, the Delaware Chancery Courtroom dominated Tyson Meals had to purchase IBP Inc., then the most important U.S. beef distributor, on the beforehand agreed upon price of $30 a share. Tyson had tried to tug out of the deal after each corporations’ monetary efficiency declined after the deal was signed — simply as Musk is attempting to stroll away from Twitter. A choose determined Tyson could not simply stroll away due to purchaser’s regret, and the corporate was compelled to accumulate IBP at its initially agreed upon value, which valued IBP at $3.2 billion. To at the present time, Tyson owns IBP.

Tyson Meals Inc., signal at Tyson headquarters in Springdale, Ark.

April L. Brown | AP

Having the deal enforced could possibly be the very best case state of affairs for Twitter traders, however might depart Twitter and its workers dealing with a risky future. If Musk actually now not needs to personal Twitter, forcing it upon him could result in one more sale, extra management adjustments, and an worker base caught in a whirlwind of uncertainly that would persist for years.

3. Twitter wins in court docket, Musk pays damages

As Vanderbilt legislation professor Morgan Ricks tweeted, it is doable a choose would select to have Musk pay damages quite than implement possession, particularly with Musk’s track record of flouting government rules and regulations. A choose could also be involved that if Musk would not wish to purchase Twitter, he might make an possession transition so troublesome that the collateral harm could be brutal.

In that case, a choose might order Musk to pay billions of {dollars} in damages to Twitter as a substitute of taking possession. The quantity of damages paid could be as much as the court docket.

4. Musk agrees to settle with Twitter

On this case, Musk would seemingly pay his $1 billion breakup payment and billions extra in a brokered settlement with Twitter. The settlement would seemingly should be sufficient that Twitter’s board would be capable to argue to traders it made the best fiduciary determination to take the settlement cash as a substitute of pursuing litigation.

5. Musk wins in court docket, pays no break payment

Ought to Musk show that Twitter supplied him false data, and that the true particulars have a materially hostile impact on the corporate, he might stroll away with out having to pay a breakup payment. In his filing on why he’s terminating the deal, Musk claims Twitter hasn’t complied with its contractual obligations after it signed the merger settlement.

Musk’s major argument is that Twitter did not present sufficient element or proof to indicate its spam accounts are 5% or much less of all accounts, as the corporate claims it estimates them to be.

“All indications counsel that a number of of Twitter’s public disclosures relating to its mDAUs [monetizable daily active users] are both false or materially deceptive,” Musk and his attorneys wrote in the filing.

Sheldon Cooper/SOPA Pictures | Lightrocket | Getty Pictures

6. Musk adjustments his thoughts once more

7. Musk and Twitter comply with a cheaper price

Musk’s motivation for attempting to finish the deal is likely to be a negotiation tactic to get Twitter to decrease the acquisition value. The market, and particularly some media and tech shares, have come down considerably in worth since April 25, the day Musk agreed to buy Twitter. Social media peer Snap is down 50% in that interval.

It is doable Musk and Twitter might comply with a cheaper price − seemingly with a really painful breakup payment to make sure he would not attempt to renegotiate once more − to regulate for the market correction.

8. A white knight buys Twitter

This can be essentially the most unlikely possibility of all, however it’s doable one other firm might swoop in and purchase Twitter at a cheaper price than $54.20 per share. Twitter’s board might argue that deal supplies extra certainty than going to court docket with Musk.

Nonetheless, a state of affairs the place one other purchaser acquires Twitter appears extra prone to occur after litigation, if Twitter loses or settles. Then, Musk could be out of the image, however Twitter may have explored its choices to both get the total $44 billion or further damages.

There aren’t any identified consumers taken with shopping for Twitter.

WATCH: Elon Musk terminates Twitter deal and claims board in materials breach

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