Versus most corporate lawsuits, Twitter’s rundown of Elon Musk reneging on his deal to purchase the social media giant is interesting reading. It’s more dime-store novel than mind-numbing legalese, which helped persuade many journalists that Twitter has an airtight case on a somewhat complicated legal doctrine called “specific performance.”
Musk is the world’s richest man, also someone who thinks he can get away with anything. Crazy Elon relishes in defying securities regulators on settlements and openly attacking anyone who gets in his way (often on Twitter) without recourse.
Finally, he can be held accountable! He’ll must undergo with the his initial $44 billion purchase.
But after looking past the adjectives, and digesting the sometimes nasty details of Musk’s Twitter dance, I’m not so sure how this may find yourself apart from providing an enormous payday for all of the lawyers involved.
First, there aren’t any real good guys here.
Twitter is very fashionable, but controversy has surrounded the corporate because it went public in 2013. Its “woke” programmers relish stifling speech. For all its relevance, Twitter has long shafted shareholders. It often still loses money. Management has refused to make meaningful changes to its business model.
Enter Musk, corporate America’s best-known disruptor for making his electric vehicle company Tesla each profitable and a cultural icon.
Twitter is suing Musk for backing out of his $44 billion buyout of Twitter. AFP via Getty Images
As even Twitter’s own lawsuit points out, Elon got here to the corporate with a suggestion it couldn’t refuse: a roadmap to make Twitter fair and financially successful (cutting expenses, eliminating bots and making the platform more ad friendly). Plus he had a ton of money nobody else would put up.
‘Best and final offer’
Twitter’s lawsuit is on strongest ground when it shows just how erratic Musk could be. He’s no strange CEO surrounded by lawyers and advisers monitoring his every move. The lawsuit points out how he began by secretly and perhaps illegally accumulating a major stake in the corporate without giving the right disclosures to the Securities and Exchange Commission.
When he initially spoke to the board about his investment, he acted like a friend trying to help current management as a board member. But that quickly modified. Unexpectedly, he hit them with demands to just accept his “best and final offer” of $44 billion, waved due diligence, and threatened to go to war unless Twitter relented, the lawsuit shows.
Now, before you get all teary-eyed for Twitter, consider that management had no selection to play Musk’s game.
Musk has been known to make use of social media to mock those he’s fighting. Getty Images
Bots might account for not more than 5% of all users, but they’re an enormous and annoying problem. The cancel culture of its algorithms stifles thought and user growth.
Musk after all, got so wealthy via his stake in Tesla, which for years kept going up in price until Jerome Powell recently put the brakes on the speculative bubble he created. When Tesla shares began to reflect reality — for all its popularity and increasing profitability, its stock stays way overvalued by traditional metrics — the stock cratered together with Musk’s net value by about $50 billion (he’s value a mere $230 billion as this goes to press).
It then dawned on Musk that not only is Twitter a basket case, but his own money was rapidly evaporating. Suddenly deal talks turned sour, the lawsuit shows in all its gory details, with Crazy Elon tweeting Twitter poop emojis concerning the company and accusations it was hiding stuff like the actual number of pretend accounts.
‘Model of hypocrisy’
On its face, such a claim appears outlandish and would amount to the company crime of the century since Twitter has for years publicly stated bots reflect a small percentage of all users.
Regardless of. A nasty letter to Twitter every week ago from Musk’s attorneys stated that he wanted out of the deal because Twitter was negotiating in bad faith over the fake accounts. Twitter’s lawyers characterised Musk’s charges as a “model of hypocrisy” since eliminating the fake stuff was how he said he was going to make Twitter profitable.
Now this sordid spectacle is heading to the Delaware Chancery Court, the go-to venue to settle high-profile corporate claims.
Late Friday, Musk responded to Twitter, saying he was on firm ground to terminate the deal because the corporate’s bot disclosures may very well be false, thus violating the merger agreement. He said the court should deny Twitter’s bid to expedite the trial because proving this takes time.
“Given the players involved, you reporters might be having a number of fun,” one lawyer within the case told me. Think Johnny vs. Amber of business disputes — also with loads of poop references.
Lawsuits are all the time difficult to predict however the Chancery Court tends to not take kindly to erratic, nonconformists like Musk. Twitter’s stock price has fallen amid the back-and-forth so shareholders appear to have suffered.
Or perhaps not. All Musk really did during his nasty tweeting was expose the issues in the corporate’s business — he could be exaggerating the number of pretend accounts, but even Twitter would acknowledge they’re an issue. If anything, he provided a roadmap on easy methods to save Twitter: Do away with the fake accounts, stop stifling free speech that pisses off half of the country and control expenses.
Crazy Elon might just win again.