After months of spending Trying to get out of the deal he signed to buy Twitter, Elon Musk now says he plans to close the deal eventually. In a letter to Twitter, filed with the SEC Musk said today that he will honor the deal to buy the company back at an initial agreed-upon price of $54.20 per share. Twitter said today that it intends to close the transaction.
Although Musk has hinted in public statements since first questioning the deal in May that he could easily walk away from his $44 billion pledge, legal experts was not surprised by this.
Robert Miller, chair of corporate finance and law at the University of Iowa Law School, says Musk’s attempt to get out of the deal he signed has always been “a difficult escalation,” citing how the businessman has moved from arguing over contracts to accusing Twitter of fraud. For this argument to work, he said, the company would have to commit “a giant, Enron-like scam,” for which no evidence has emerged.
In May, Musk announced that his Twitter acquisition was “temporarily hold“, stating that the company has downplayed the number of spam and fake accounts on the platform. In a legal filing in August, Musk alleges. Twitter scam, claims that there are more bots on the platform than the company has revealed. In September, after denouncing Peiter “Mudge” Zatko testified before the US Senate that Twitter’s cybersecurity is “a decade behind industry security standards”, Musk added those allegations to his own lawsuit.
However, by accusing Twitter of fraud has put Musk himself a high legal hurdle. The fraud allegations are difficult to prove, Miller said, requiring proof that Twitter not only knew about any of the issues but also sought to intentionally mislead Musk about them.
The document that came to light ahead of a trial that begins next week in Delaware’s Chancery Court doesn’t support that argument much. “He knew his best claim was cheating, but they got the proof from Twitter, and there’s nothing like cheating here,” Miller said. “They ran out of cards to play.”
Musk’s hasty decision could also be influenced by the possibility that the test could harm him personally. Businessman watched the internet ruminating a his personal text message thread with Silicon Valley protagonists last week. This week, he’s faced with what Miller said could be “very embarrassing” deposition.
With such a narrow chance of victory, pressing to court could see Musk do more damage to the company that seems increasingly likely he will own. That could jeopardize his relationship with co-investors, who have eased some of the financial pressures, said Ann Lipton, an associate professor of business law and entrepreneurship at Tulane University. for the entrepreneur by agreeing to finance his acquisition. “The longer this goes on, not only will Musk risk buying a worse company than he started the process with, but he also does it with less backing from equity,” Lipton said.
