Elon Musk has chosen a side, and to much dismay, he has decided not to go through with the $44 billion Twitter acquisition. While most of us were expecting a slew of changes and some banned people returning to the platform, none of that is likely to happen now.
But what’s most likely to happen are these 5 things that Elon Musk’s bailing out on Twitter deal has kickstarted.
5 things that Musk’s Twitter deal bailing will do
1. Twitter will sue
This is an outcome as sure as the fact that Monday comes after Sunday. Elon enjoyed the spotlight of his sunny Sunday with all eyes on his Twitter deal. Now he has to face the gloomy Monday where Twitter sues Musk, and the trial begins.
Brett Taylor, Twitter’s Chairman, has already announced that the company is suing Musk in the Delaware Court of Chancery. CEO Parag Agrawal also retweeted the post.
2. Musk will be forced to buy
Twitter’s lawsuit aims to get Elon Musk to go through with the deal. Litigation is going to cost both parties time, money, and reputation. While Musk has slammed Twitter for being riddled with bots, Twitter also has Musk’s agreement which binds him to pay up.
In any case, one of the most probable outcomes will be Elon Musk buying Twitter. The best-case scenario for Musk could be a slightly lower price, but the cost of suing and countersuing dull that discount.
3. Elon Musk will pay a penalty
Firstly, the case will be tried in a Delaware court with a track record of going against buyers who back out of their word. So much so that an article by Santa Clara University calls it the “business’ most important court.”
This means Musk’s slim chance of getting away with a penalty. However, the case going to this court means a settlement, and Musk is going through with the buyout, but this is also a possibility.
4. Twitter employees fire back
Thanks to this deal, Twitter employees have had a roller coaster of a year. Several senior-level employees were pinpointed and shamed by Musk, intentionally or unintentionally. Mr. Musk’s tweets edged his followers to bully senior Twitter employees online.
There’s a case to be made where Twitter can argue that Mr. Musk violated the agreement with his tweets, causing harm to Twitter’s representatives. However, since Twitter already had this cause of action and didn’t seek legal measures at the time, this argument can be questioned, but it doesn’t make it any less effective.
5. Elon could get out of it
Last but not least, Elon Musk can bail out of his Twitter deal for free. Despite getting access to Twitter firehose, and a host of other features, Musk says he can’t put a number on the bot accounts.
A recent Harvard study called counting Twitter bots a futile exercise. However, if the court considers it enough, Mr. Musk could prove Twitter didn’t fulfill its side of the agreement. If that happens, then it is Mr. Musk’s walk-out-of-deal-free card.
Elon Musk bails on Twitter deal
In four of five scenarios here, we see Mr. Musk paying up one way or the other. Acquisitions like this one are not as simple to get out of, and they cost tons of money to wage a legal war. If it comes to that, there’s no clear winner for the coming months.
On the one hand, Twitter has given Elon the access to data he asked for and made several clarifications about the bot issue. On the other hand, Mr. Musk, who forced his way into this deal in the first place, is now backing out of it.
Elon’s aggressive manner caused Twitter shares to tumble and rise to his command. It even caused unrest among Tesla investors who thought Musk was too committed to the Twitter deal. Lastly, it caused Twitter investors to sue Musk for tanking the value of their stake in the company.
All that said and done, it remains to be seen how ugly it gets before it normalizes for both parties. What do you think about the deal falling apart? Was it Musk or Twitter that caused this? Do let us know in the comments.