Elon Musk arrives at the In America: An Anthology of Fashion themed gala at the Metropolitan Museum of Art in New York, New York on May 2, 2022.
Andrew Kelly | Reuters
In the latest twist in the Elon Musk-Twitter saga, the world’s richest man has told the social media company that he no longer intends to buy it. Twitter Chairman Brett Taylor immediately shot back that the company intends to go to court to get the $44 billion deal closed on the agreed price and terms.
It’s hard to predict how a drama will end up, especially one involving a mercurial merchant. It is impossible to guess all the various permutations that may eventually involve secondary issues such as funding. But here are eight possible scenarios.
1. Deal closes, Musk pays breakup fee
In concept, this could be the cleanest option for all people—no litigation, musk agreeing to pay a $1 billion termination price, and twitter continuing, albeit at a far lower $44 billion valuation. That’s the manner of twitter co-founder eve williams appeared to be in response when he tweeted that he might have asked if “we may want to just permit this whole ugly episode be over” if he changed into still on the board of administrators.
The hassle is that the board might be breaching its fiduciary duties if it allowed musk to choose out — and taylor’s reaction indicates that twitter has no goal of doing so. Twitter additionally has a robust felony case that musk determined to buy the company for $fifty four. 20 consistent with percentage. Allowing him to go away handiest after he’s paid for the breakup is in all likelihood to send twitter inventory even lower. They had been already buying and selling at a deep discount as investors doubt whether or not and whilst the deal will manifest. On friday, the stock closed at $36. 81.
“they could’t just say, ‘k, let’s keep us the pain, elon, we’ll assist you to knock the charge all the way down to $20 a proportion, or we’ll make a deal, we’ll agree to walk away if you simply pay 1000000000-dollar smash price.’” said ann lipton, a professor of corporate governance at tulane regulation school. “twitter just can’t do it.”
2. Twitter wins the lawsuit, Musk buys the company
3. Twitter wins lawsuit, Musk pays damages
4. Musk agrees to settle with Twitter
In that case, Musk would likely pay his $1 billion severance fee and billions more in a mediated settlement with Twitter. The settlement should likely be enough for Twitter’s board to prove to investors that it made the right fiduciary decision to take the settlement money instead of litigation.
5. Musk wins lawsuit without paying break fee
If Musk can prove that Twitter gave him false information and that the true details would have a materially negative impact on the company, he can leave without having to pay a breakup fee. He has In explaining why he is ending the deal, Musk claims that Twitter failed to meet its contractual obligations after signing the merger agreement.
Musk’s main argument is that Twitter hasn’t provided enough detail or evidence to show that spam accounts make up 5% or less of all accounts, as the company claims it estimates.
“All indications are that Twitter’s few public disclosures regarding its mDAU [monetizable daily active users] are either false or misleading,” Musk and his lawyers wrote in a statement.
Images by Sheldon Cooper/SOPA | Lightrocket | Getty Images
6. Musk changes his mind again
7. Musk and Twitter agree on a lower price
Musk’s motivation for trying to stop the deal may be a negotiating tactic to force Twitter to lower the acquisition price. The market, and particularly some media and technology stocks, have fallen significantly since April 25, the day Musk agreed to buy Twitter. During that period, Snap’s social network peers fell 50%.
It’s possible Musk and Twitter could agree to a lower price — probably with a very painful breakup fee to ensure he doesn’t try to renegotiate again — to accommodate the market correction.
8. White Knight buys Twitter
This may be the most unlikely option of all, but it’s possible that another company could swoop in and buy Twitter for less than $54.20 per share. Twitter’s board may argue that the deal provides more certainty than taking Musk to court.
However, a scenario in which another buyer acquires Twitter seems more likely after a lawsuit where Twitter loses or settles. Then Musk won’t be aware, but Twitter will explore its options to either get the full $44 billion or take more losses.
There are no known buyers interested in buying Twitter.
