Corporate-law experts say Twitter appears to be on sounder legal footing than Mr. [Elon] Musk. The filing [by Musk to withdraw from the Twitter purchase agreement] didn’t provide evidence to back up his assertion that the estimate [of spam bots on Twitter] was inaccurate or an alternate calculation. “This isn’t even in the ballpark,” said Zohar Goshen, professor of transactional law at Columbia Law School, adding that the impact on a company’s value needs to be so dramatic that its value would be halved, for example. . . .
The question remains whether it is really possible to force the eccentric billionaire—known for eschewing norms even when it gets him in legal trouble—to buy a company he doesn’t want to own.[1]
For the world’s richest man, Elon Musk is supposedly cash poor. He had to arrange financing for the deal to purchase Twitter and there was some uncertainty as to whether he could or would pull it off.[2] So I continue to believe that it wouldn’t be very difficult at all for all this financing to collapse.[3] That leaves me extremely skeptical that Musk can be forced to buy Twitter.
Another of Danny Fortson’s possibilities was that Musk will really push his claim that Twitter breached the deal. I’m just not seeing anyone say Musk has a legal leg to stand on here. He waived due diligence and was well aware of the bot problem well before he initiated his purchase. But he’s effectively claiming he didn’t know what he was getting into.[4] This is unlikely to carry much weight in the courts[5] and I don’t see judges doing anything but rolling their eyes at this one.
Of Fortson’s possibilities, that leaves a settlement, with Musk purchasing Twitter at a lower price.[6] Everything I’ve ever heard about civil proceedings is that judges lean heavily on parties to settle out of court and so this is what I expect to happen here. Short of a bankruptcy, where I assume Musk would be required to liquidate many of his Tesla shares, which had already fallen in price as Musk was putting his deal together,[7] and would presumably fall further, Musk will be forking out a lot of money, certainly no less than $1 billion and maybe many billions of dollars.[8] It doesn’t follow, however, that he necessarily gets to own Twitter as part of such a settlement. And I think that’s really the remaining question.
Cara Lombardo and Robert Wall, “Twitter Didn’t Seek a Sale. Now Elon Musk Doesn’t Want to Buy. Cue Strange Legal Drama,” Wall Street Journal, July 11, 2022, https://www.wsj.com/articles/elon-musk-twitter-strange-legal-fight-11657488572
- [1]Cara Lombardo and Robert Wall, “Twitter Didn’t Seek a Sale. Now Elon Musk Doesn’t Want to Buy. Cue Strange Legal Drama,” Wall Street Journal, July 11, 2022, https://www.wsj.com/articles/elon-musk-twitter-strange-legal-fight-11657488572↩
- [2]William D. Cohan, “How Elon Can Get That $40B,” Puck News, April 20, 2022, https://puck.news/how-elon-can-get-that-40b/; William D. Cohan, “Elon’s Gamble: Imagining Tesla Stock Judgment Day,” Puck News, April 27, 2022, https://puck.news/elons-gamble-imagining-the-tesla-stock-judgment-day/; Rob Copeland, Rebecca Elliott, and Cara Lombardo, “Elon Musk Makes $43 Billion Bid for Twitter, Says ‘Civilization’ At Stake,” Wall Street Journal, April 14, 2022, https://www.wsj.com/articles/elon-musk-offers-to-buy-rest-of-twitter-for-54-20-a-share-11649932296; Spencer Jakab and Dan Gallagher, “Musk’s Twitter Deal Is No Sure Thing,” Wall Street Journal, May 11, 2022, https://www.wsj.com/articles/musks-twitter-deal-is-no-sure-thing-11652287373; Cara Lombardo and Will Feuer, “Elon Musk Says He Has Commitments for $46.5 Billion in Financing for Twitter Deal,” Wall Street Journal, April 21, 2022, https://www.wsj.com/articles/elon-musk-says-he-has-commitments-for-46-5-billion-in-financing-for-twitter-deal-11650549097; Cara Lombardo and Robert Wall, “Twitter Didn’t Seek a Sale. Now Elon Musk Doesn’t Want to Buy. Cue Strange Legal Drama,” Wall Street Journal, July 11, 2022, https://www.wsj.com/articles/elon-musk-twitter-strange-legal-fight-11657488572; Douglas MacMillan et al., “Elon Musk acquires Twitter for roughly $44 billion,” Washington Post, April 25, 2022, https://www.washingtonpost.com/technology/2022/04/25/twitter-elon-musk-deal/↩
- [3]David Benfell, “Elon Musk’s Achilles’ heel,” Not Housebroken, July 10, 2022, https://disunitedstates.org/2022/07/10/elon-musks-achilles-heel/↩
- [4]William D. Cohan, “The Musk Reckoning,” Puck News, July 10, 2022, https://puck.news/the-musk-reckoning/↩
- [5]Danny Fortson, “Erratic Elon Musk leaves Twitter with three unbearable choices,” Times, July 9, 2022, https://www.thetimes.co.uk/article/erratic-elon-musk-leaves-twitter-with-three-unbearable-choices-g3tg5zlbt; Cara Lombardo and Robert Wall, “Twitter Didn’t Seek a Sale. Now Elon Musk Doesn’t Want to Buy. Cue Strange Legal Drama,” Wall Street Journal, July 11, 2022, https://www.wsj.com/articles/elon-musk-twitter-strange-legal-fight-11657488572; Faiz Siddiqui and Gerrit De Vynck, “Elon Musk’s deal to buy Twitter is in peril,” Washington Post, July 7, 2022, https://www.washingtonpost.com/technology/2022/07/07/elon-musk-twitter-jeopardy/↩
- [6]Danny Fortson, “Erratic Elon Musk leaves Twitter with three unbearable choices,” Times, July 9, 2022, https://www.thetimes.co.uk/article/erratic-elon-musk-leaves-twitter-with-three-unbearable-choices-g3tg5zlbt↩
- [7]William D. Cohan, “Elon’s Gamble: Imagining Tesla Stock Judgment Day,” Puck News, April 27, 2022, https://puck.news/elons-gamble-imagining-the-tesla-stock-judgment-day/↩
- [8]Danny Fortson, “Erratic Elon Musk leaves Twitter with three unbearable choices,” Times, July 9, 2022, https://www.thetimes.co.uk/article/erratic-elon-musk-leaves-twitter-with-three-unbearable-choices-g3tg5zlbt↩