Elon Musk’s deal to buy Twitter looks to be dead.
Now the social media giant is taking him to court.
But Twitter got some bad news in its fight with Musk.
Elon Musk has pulled out of his deal to buy Twitter and take it private.
His stated rationale was that he could not verify how many fake accounts were on the platform because Twitter did not disclose key information.
However, others have argued that Musk simply wants to negotiate the price down, or the entire bid was a clever ruse to sell off Tesla stock without tanking the value of the company.
Either way, Twitter has taken Musk to court in an attempt to force Musk to buy the company at the agreed upon price of $44 billion.
But legal experts say that Twitter is going to have a tough time getting the outcome it wants in court.
The Wall Street Journal reported that Musk “is likely to walk away largely unscathed, a belief reflected in Twitter’s stock price. This case will be a good lesson on the limits of boilerplate merger agreements and the difference between a corporation and its shareholders. The merger agreement in this case could be read in a way that permits a court to order Mr. Musk to buy Twitter—he and two entities he controls agreed they would ‘not oppose’ such an order—through a remedy known as ‘specific performance.’ Although litigation is always uncertain, it is hard to imagine a court would force the purchase of a $44 billion corporation. Specific performance is used fleetingly, and for good reason. It is the ultimate act of coercion, and it makes sense only when there is no alternative.”
In this case, Musk has not precluded anyone else from buying Twitter.
He agreed to pay a $1 billion penalty, but even that payout could be limited because Twitter cannot show real damages.
The Journal added that “the issue of the $1 billion breakup fee remains. Courts will be much more likely to make Musk pay to walk away than force him to walk down the aisle. But it isn’t clear he will have to pay that much. Breakup fees are supposed to reflect damages caused by a breach of contract. They aren’t supposed to act as a penalty. Given that Twitter isn’t obviously worse off by $1 billion—if at all—a court might balk at imposing such a high fee.”
Musk appears to have Twitter over a barrel.
The company cannot force him to buy it, and even if a court does, he still gets control of Twitter, much to the dismay of the Left.
If he walks away, he was able to liquidate billions in Tesla stock without triggering a mass sell-off.
And he might not even have to pay the full $1 billion breakup fee.
Even if Musk does, he still walks away with $7.5 billion in cash.
Stay tuned to Unmuzzled News for any updates to this ongoing story.