Since April, among various prominent global events, Elon Musk’s offer to buy Twitter for $44 billion kept taking centre stage. In many ways, the cat and mouse game between the world’s richest man and the micro-blogging site resembled a successful Netflix series.
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It had a great plot and an all-star cast: a billionaire attempting a hostile takeover of one of the largest social media platforms to promote freedom of speech. To do it, he uses the very micro-blogging site to criticise its management and board.
In just over three months, Musk aggressively sought to buy Twitter. The platform first resisted, then reneged. He prevailed. The final twist in the tale is he has decided to not buy his takeover target. And that is how the series’ first season culminates.
On Friday, he said he wanted out, accusing the company of withholding data from him and saying its statements on spam on the platform represent material misstatements to regulators. In the papers filed, he argued Twitter was making important changes to the running of its business without his consent.
And, like all good series, the season finale ends with the question of ‘what’s next?’ If the current season played out on social media, the next one will take place in a courtroom. Some legal experts point out that Twitter has a solid case against Musk.
But the more important question for Twitter to ponder over is whether Musk would follow a court order and buy the company as no one can force another party to buy something that don’t want.
According to a report by the Wall Street Journal, there have been a few cases of buyers being forced to follow through with purchases under the “specific-performance” clause Musk agreed to, but most were small deals. This concept of a court ordering a person to complete a deal has not been tested at a $44 billion scale.
So, if Musk chooses to walk away, at best, the court can ask him to pay a penalty for his takeover act. And this could be that $1 billion Musk agreed to pay Twitter as a break-up fee if there is an outside reason for the deal to fall apart, such as regulatory intermediation or third-party financing problems.
Also, the break-up fee agreement can be used if the buyer finds out that the target furnished him incorrect information. In this case, Musk can use the issue of bots on the platform to break free from the Twitter deal. But these scenarios can play out differently in a courtroom.
So, for now, as Elon Musk vs. Twitter moves to season two, its party time for white-shoe law firms.