Twitter’s Uncertain Future After Chaotic Breakup With Musk

Courted and then rejected by the world’s richest man, Twitter seems well positioned to win a court battle with Elon Musk over a fine of at least $1 billion, but the social network will not emerge unscathed.

The deal “started as a circus show and is ending up as a circus show,” Dan Ives, an analyst at investment firm Wedbush, told AFP.

Musk, founder of electric car company Tesla, sent a letter to Twitter on Friday saying he was backing out of a controversial deal he made in April to buy the platform for $54.20 a share, or a total of $54.20 a share. 44 billion.

However, these merger deals are “designed to keep buyers from stepping back and deciding to walk away,” says Ann Lipton, a professor of law at Tulane University who specializes in corporate litigation.

Musk, who also heads SpaceX aerospace, accused the social network of delivering “false or misleading statements” about the number of fake accounts on its platform.

His lawyers also pointed out that Twitter laid off employees and stopped hiring, a practice they see as contrary to the company’s obligation to continue operating normally.

Those arguments may be valid, but they don’t guarantee a full exit from the deal, says Lipton, who calls the measure “flapper.”

“They are not enough unless he can prove that the statements (about false accounts) are not only false, but also affect the fundamental bases of the agreement,” he explains.

“Twitter would die”

There is even the possibility that the billionaire is in fact trying to renegotiate a lower price.

This tactic has been used successfully before, such as when two years ago, LVMH, the global luxury giant, broke a deal to acquire Tiffany before getting a discount.

However, experts don’t see how Musk and Twitter can agree on a different price at this point, as the platform’s shares have lost more than a quarter of their value since late April.

“Both have a lot to lose,” warns Lipton.

If Twitter wins in court, the businessman will have to pay at least a billion dollars in damages.

At worst, he could be forced to honor his commitment and buy Twitter at a price that has become exorbitant, while his fortune has been consumed in the tens of billions of dollars in recent months.

While this would be a win for shareholders, the company would be in the hands of Musk and his libertarian vision of absolute freedom of expression, a position not shared by many of its employees, users and advertisers.

“Twitter is worse now than it was six months ago, but in the long run, it will be better off without it,” says Carolina Milanesi, an analyst at Creative Strategies.

“It’s like a toy that a spoiled child wants but doesn’t know what to do with it, so gets bored and doesn’t give it the attention it deserves, and forgets it in a corner (…) Twitter would die a slow and painful death” , predict.