Now it’s Twitter’s turn to screw with Elon Musk. Tesla’s boss walked away from the $44 billion purchase of the social network on Friday after months of criticism of the company. The social network company has now hired Wachtell, Lipton, Rosen & Katz to prepare a lawsuit in order to force it to honor the merger agreement. The legal ammunition, which includes former Delaware Chief Justice Leo Strine, could get complicated. But the more complicated it gets for Musk and Twitter, the more likely they are to strike a deal on their own before the court decides.
The deal, hastily hammered out in April, includes a lackluster $1 billion fee to be paid by Musk if he pulls out, provided certain criteria are met. For weeks he has complained about fake accounts on the platform, and on Friday he cited that as a reason for leaving.
Things could get ugly for both parties, at least in the short term. If Musk stays true to his style, he will continue to work to undermine Twitter’s business model. The market value of the social network was once valued at $40 billion under its halo, but has fallen to around $26 billion, some $4 billion below where it was before Musk revealed his 9% stake in the company. april. The more impossible you make life for them, the more likely they will settle out of court. But Twitter can use the public battle to get Musk to pay more, which could be the goal. Musk also has distractions. Tesla shares have lost more than a third since early April, while the S&P 500 is down less than half.
The more painful the legal process, the more motivated you might be to get Twitter off your back. In addition, Musk’s funding could be reeling, and Twitter shareholders could use some certainty, such as paying a huge sum for backing out. Closing this chapter would help put the company in a position to try to change or position itself better in the face of a more determined buyer.