If not taking over Twitter, Elon Musk not only has to pay a $1 billion fine, but also could be entangled in a complicated lawsuit.
 |
| Billionaire Elon Musk has repeatedly hinted that he will reconsider the acquisition of Twitter. |
On May 13, Musk announced to postpone the purchase of Twitter to study whether the number of fake accounts on Twitter is really just under 5% as this platform statistics. Three days later, at the All-In Summit conference in Miami, the South African-born billionaire said he might negotiate with Twitter about buying the platform for less than $44 billion.
In the previous agreement, Musk would have to pay Twitter a billion dollars if "regret". "This is a pretty cheap exit. The amount of one billion dollars is nothing compared to Musk's $230 billion fortune and the $44 billion contract value," Fortune said.
However, behind the contract there are many constraints that make it difficult for the richest person in the world to give up buying Twitter. "Leaving with a 'parting fee' is not a good option for Musk right now," professor Mitu Gulati told Axios. He noted that the termination clause comes with many specific requirements, not simply that the buyer finds the price too high.
Meanwhile, CNBC quoted lawyers as saying that the stock market crash, which led to the evaporation of $ 9 billion of Twitter, was not valid enough for Musk to justify withdrawing. If he drops the deal for this reason, Twitter could take him to court, demanding billions of dollars more in damages, not just one billion.
Two years ago, the Tiffany company sued the French group LVMH for trying to withdraw from the mutual agreement. The lawsuit was later settled by Tiffany agreeing to reduce the selling price of the company from $16.2 billion to $15.8 billion. Therefore, many experts believe that Musk's recent hidden messages are just "tricks" to pressure Twitter prices.
"The market has gone down a lot. Musk may be using this to his advantage in negotiations," said Toni Sacconaghi, senior research analyst at Bernstein.
However, many people also predict that Musk may really want to quit the deal after carefully weighing the benefits. Bloomberg quoted John McClain, chief investment officer of Brandywine Global Investment Management: "Musk's $44 billion acquisition is a terrible investment. No one has poured that much money into a business like Twitter - which has not been have never proven that they can generate high profits.
Next are the financial risks involved. Shares of Tesla and Twitter have both plummeted since the deal was announced. In addition, governance issues also make Tesla CEO no longer excited. Previously, he wanted to publicize the content sorting algorithm, turning the platform into a "freedom square", but in reality, things did not go as he wanted. In addition, a personnel crisis that is rekindling in this social network may also be one of the reasons for Musk to rethink.
