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Elon Musk and Twitter, what can happen now?

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Elon Musk and Twitter, what can happen now?
Written by aquitodovale

A legal battle will begin that can also turn very badly for Tesla’s number 1 and Space X. There are three hypotheses in the field. Plus a fourth unprecedented scenario

Like an addendum novel: the story of Elon Musk’s acquisition of Twitter, first whispered, then announced, then questioned and finally retracted, has much more to tell. And maybe more twists around the corner.
There are two certainties. The first: a long and bloody one will begin legal battle, triggered by Musk’s renunciation to acquire the majority shares of the social network. The second: the share value of Twitter, which already fell by almost 5% in the after-hours trading on Friday, is destined to fall further, perhaps to collapse.

Musk, also struggling with personal troubles (it was just revealed that he had twins with an employee), had pledged last April to buy Twitter for $ 44 billion. That is to say $ 54.20 per share. The blue bird quotations on Wall Street on Friday closed were high $ 36.81, 5.10% less than on Thursday. In after hours, they lost another 4.81% to $ 35.04 per share. According to all experts, this is the real reason for the Tesla and Space X patron’s turnaround. Even if Musk had found the necessary money, the agreement is no longer economically viable after months of even drastic falls in company prices. tech. Tesla itself, which in April had reached $ 1140 (and in December over $ 1,200) is now quoted at $ 750. Officially, the South African billionaire has motivated the turnaround by clinging to the topic of fake accounts: Twitter would not have been sincere, not revealing the true number of “non-human” subscribers. From a legal standpoint, the hold could prove fragile for Musk. Certainly, the Twitter board has no intention of drafting and accepting the breaking of the agreement.

In Delaware

The chairman of the board of directors of Twitter, Bret Taylor announced (obviously with a tweet) that the company is still committed to closing the deal at the agreed price and plans to take legal action to enforce the deal. “We are confident that we will prevail in the Delaware courts,” Taylor wrote.
If, as is almost certain, the affair were to pass into the hands of the lawyers, the trial will most likely take place in Delaware, the US state where Twitter is registered (Delaware offers companies an extremely favorable tax regime). There is already a possible judge: Kathaleen St. J. McCormick, identified by the US media because she is already dealing with the lawsuit that the Orlando police pension fund has filed on the Musk-Twitter agreement.

The 3 hypotheses

There are three fundamental hypotheses on how the matter will end.
1) Elon Musk pay the penalty agreed in April in the event of withdrawal, equal to 1 billion dollars, and exits the agreement. While a $ 1 billion fine may seem like a huge amount to us mere mortals, it would be a win for Musk, considering how things have turned out and how much the shares have depreciated in the meantime.
2) The judge can force Musk to buy Twitter at the agreed price. And eventually it can also add a fine. Paragraph 9.9 of the Musk-Twitter merger agreement states that the company “will be entitled to specific benefits or other equitable remedy to enforce the obligations [di Musk]”. US administrative law experts cite the precedent of IBP Inc. v. Tyson Foods Inc, with Don Tyson of Tyson Foods playing the role of Elon Musk. Tyson tried to pull out of the concerted takeover of IBP, but in 2001 he was forced to buy the company anyway from the Delaware court.
3) A out-of-court settlementwith Musk paying a large sum (over a billion penalty) to Twitter and avoiding the risk of being forced by the judge to buy the social network.
There is a fourth chance, Knowing Musk: What if the judge forces Musk to buy Twitter and the billionaire simply refuses to do so? There aren’t many precedents.

Twitter and the Stock Exchange

While legal things can go badly for Musk, on the financial front Twitter is set to take the worst blows.
The company is now in a very bad situation. Analyst Dan Ives, quoted by Nbc News, fears that the stock could collapse further on Monday: «Monday this is a 25 dollar stock. The company is in sheer chaos: employees are leaving in large numbers and competitors are getting their hands on advertising revenue. With a high turnover of employees, Twitter will be seen as “bad merchandise” by another potential buyer ».

09 July

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