“It’s one of the craziest business deals I’ve ever seen. From the start it looks like a circus show and is ending like a circus, “reacted Wedbush analyst Dan Ives.
Elon Musk sent a letter to Twitter on Friday, announcing that he would end the deal he made in April to buy the platform for $ 54.20 per share, or $ 44 billion in total.
But this type of contract is “designed to prevent buyers from panicking and withdrawing,” recalls Ann Lipton, a law professor at Tulane University.
The Tesla and SpaceX boss presents several arguments: the board of directors (CA) would have minimized the number of unauthentic accounts active on the platform, and would not have provided him with all the information necessary to properly assess the spam problem.
Elon Musk’s attorneys are also referring to Twitter’s recent employee layoffs and hiring freezes, contrary to the company’s obligation to continue operating normally. These are not enough reasons, the business law specialist believes.
“Musk is looking for the little beast. But for “false statements”, for example, it is not only necessary to prove that they are false, but also that they drastically question the company’s economic fundamentals, ”he explains. “From a legal standpoint, it seems clear that Musk is wrong,” he adds.
Everything to lose
The possibility remains that the multibillionaire is still trying to renegotiate the lower price. This tactic had been used successfully by LVMH: two years ago, the global luxury giant broke his engagement with Tiffany before getting a discount.
But experts don’t see what price Elon Musk and Twitter might agree on, while the platform’s stock has lost more than a quarter of its value since late April. “Both sides have a lot to lose,” says Ann Lipton.
If Twitter wins in court, the extravagant businessman will have to pay a few billion dollars in damages. At worst, he could be forced to honor his commitment and buy the Californian group at an exorbitant starting price, while his fortune has dwindled by a few tens of billions of dollars in recent months.
But this win for shareholders would leave the company and the iconic social network in the hands of Elon Musk. However, his view is not at all aligned with that of many employees, users and advertisers, on whom the economic model of this service depends.
“Twitter is in worse shape than it was six months ago, but in the long run it’s even better that it doesn’t belong to Musk,” said Carolina Milanesi.
humiliated blue bird
“It would be like giving a toy to a capricious child who no longer wants it and doesn’t know what to do with it,” continues the Creative Strategies analyst. The blue bird “would fade slowly and painfully”.
The trial is expected to take months, especially as Elon Musk will drag things along, according to Ann Lipton. The libertarian entrepreneur, followed by over 100 million people on the platform, “will try to humiliate them and be demoralizing for the employees,” she says.
He has already harassed the service with very critical tweets, mockery and outlandish suggestions, encouraged by his fans. For Twitter, “it will be a battle on all fronts, to keep their engineers, not to lose ground, to preserve their brand image and address investor questions,” elaborates Dan Ives.
Unlike its neighbors in Silicon Valley, the tweeting network has never become a money-making machine capable of turning users’ attention into astronomical ad revenue. “In recent months, Twitter has not been able to focus on its business. They will end up with the same problems they had before Musk, ”says Debra Williamson of eMarketer.
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