Courted and then rejected by the richest man in the world, Twitter seems well positioned to win a court battle with Elon Musk over a break fee of at least $1 billion.. But the company will not come out unscathed.
The outcome of the saga between the company and the billionaire left observers baffled. “It was one of the craziest business stories ever” synthesized the analyst of the Wedbush investment firm, Dan Ives.
“I think it started out as a circus show and it’s ending as a circus show,” Ives said.
On Friday Musk sent a letter to Twitter saying that was withdrawing from the controversial deal he made in Aprilwhich consisted of buying the platform at a rate of US$ 54.20 per share, or a total of US$ 44,000 million.
Nevertheless, merger agreements of this type are designed to prevent buyers from backing down and deciding to withdrawas explained by Tulane University law professor and corporate litigation specialist Ann Lipton.
Musk accused the social network of delivering “misleading statements” about the number of fake accounts on its platform. His lawyers also pointed out that Twitter fired employees and stopped hiring, a practice that they consider contrary to the company’s obligation to continue operating normally.
According to Lipton, these arguments may have merit but they do not merit going out of business altogether. “It is not enough, unless he can show that the statements (about false accounts) are not only false, but call into question the fundamental foundations of the agreement,” he explained.
“It gives every impression that Musk is legally in the wrong,” Lipton said.
twitter would die
Musk’s withdrawal opens up the possibility that the billionaire is in fact trying to renegotiate a lower price.
Nevertheless, experts don’t see how you could agree on a different price at this point Given the the platform’s shares have lost more than a quarter of their value since the end of April.
“Both have a lot to lose”Lipton warned. If Twitter wins in court, the businessman will have to pay at least US$1 billion in damages. In the worst case scenario, you could be forced to honor your commitment and buy the platform at a price that has become exorbitant while his fortune has been melting by the tens of billions of dollars in recent months.
Although that would be a victory for shareholders, the company would remain in the hands of the billionaire and his libertarian vision of absolute freedom of expression, a position with which many of the employees, users and advertisers on whom the platform’s business model depends do not agree.
“Twitter is worse now than it was six months ago, but in the long run it will be better off without it.”“, Creative Strategies analyst Carolina Milanesi said. “It’s like a toy that a spoiled child wants, but they don’t really know what to do with it, so they get bored and don’t give it the attention it deserves (…) Twitter would die slowly and painfully“, he explained.
Battle on all fronts
Any court proceedings are expected to take months.especially since, as Lipton predicted, Musk will drag it out.
The corporate litigation specialist noted that Twitter is in a “solid” position. While the employer will try to ridicule them, which will be “distracting” and “demoralizing” for their employees.
For Twitter it will be a battle on all fronts: “Keep employees, watch the competition coming after your business, get investors to believe the numbers,” Ives said.
Unlike its Silicon Valley neighbors, Twitter has never been a money-making machine capable of translating its users’ attention into astronomical ad revenue. “These months have been a huge distraction for Twitter, and have prevented it from focusing on the fundamentals of its business.“, noted Debra Williamson of eMarketer.
With more than 100 million followers on the platform, Musk has shown signs of harassing the company with highly critical tweets, ridicule and outlandish suggestions for use.
AFP
