Twitter was sought after and then rejected by the wealthiest man in the world. Now, the board of directors faces a legal battle that Twitter has every chance to win, but which will leave the company with no choice.
"This is one the most bizarre economic deals I have ever seen." It looks like a circus show from the beginning, and it's ending as a circus," said analyst Dan Ives at Wedbush.
Elon Musk sent a tweet to Twitter Friday announcing that he would be ending his April agreement to purchase the platform for $54.20 per Share or $44 billion.
Ann Lipton, a Tulane University law professor, said that this type of contract was "designed to stop buyers from panicking" and decide to walk away.
SpaceX and Tesla's boss present several arguments. The board of directors (BOD), would have reduced the number of fake accounts on the platform and would not have given him all the information necessary for a proper assessment of the spam problem.
Lawyers for Elon Musk also mention recent firings of Twitter employees as well as the recruitment freeze. This is contrary to the company’s obligation to continue operating normally. The specialist in business law believes these are not sufficient reasons.
"Musk is searching for the little beast. She explains that "false statements" are not only necessary to prove they are false but also must show that they seriously question the economic fundamentals. She adds that Musk's legal position is clear.
The multi-billionaire may still be open to lower prices. This tactic has been successfully used by LVMH: Two years ago, the global luxury company broke off an engagement with Tiffany before securing a discounted price.
Experts are unsure of what price Elon Musk or Twitter could agree to, and Twitter's value has dropped more than 25% since April. Ann Lipton says that both sides have a lot at stake.
The sly businessman who created Twitter will be liable for a few billion dollars of damages if he wins. He could have to honour his promise and purchase the Californian group for the exorbitant start price. His fortune has plummeted by several tens of millions of dollars over the past months.
However, this win for shareholders would mean that Elon Musk would be able to take over the company and its iconic social network. His vision does not align with the views of many users, advertisers, and employees who depend on this service's economic model.
Carolina Milanesi stated that although Twitter is in worse shape now than six months ago it will be in the future, it is still better that it does not belong to Musk.
The Creative Strategies analyst says, "It would be similar to giving a toy a fickle child doesn't want anymore and doesn't understand what to do with it." "The blue bird would slowly and painfully disappear."
Ann Lipton says the trial will last several months because Elon Musk will drag it out. She says that Elon Musk, a libertarian entrepreneur who is followed by over 100 million people, will try to humiliate them and it will be demoralizing.
His fans encouraged him to harass the service with a series of very negative tweets, mockery, and outrageous suggestions. Dan Ives explains that Twitter will be facing a "battle on all fronts" to retain their engineers, not lose ground, preserve their brand image, and deal with investors' questions.
The tweeting network, unlike its Silicon Valley neighbors, never turned user attention into huge ad revenues. "Twitter has not been able to concentrate on its business over the past few months. Debra Williamson, eMarketer, stated that they will end up with the same problems as Musk.
"User growth slows. While advertising revenue is increasing at a margin, the group is currently facing a global economic slowdown which is affecting advertising budgets across all social media networks.
