Elon Musk is about to enter a showdown with Twitter after he
recently announced that he is considering terminating his $44 billion dollar
deal to purchase the social media company. This could become one of the most
unusual courtroom battles in corporate history as Twitter scrambles to force
the eccentric billionaire to keep good on his end of the deal. Can he just walk
away from the deal? Not without facing a fine and a potential lawsuit.
Was Elon ever serious about buying twitter? The enthusiasm shown
at the beginning of the deal would suggest yes. However, now that Musk has
decided to back out of the deal citing multiple issues that would need to be
fixed before paying, suggests that maybe it all was just for show. Musk stated
that the amount of fake accounts, along with shareholder approval and the debt
ratio were the biggest reasons he was hesitant to move forward with the deal.
So,
what does this mean for Musk? The fate of this deal is uncertain, but it is
very possible that Musk could face a $1 billion dollar fine along with a
massive lawsuit if he is unable to provide a predetermined reason for breaking
the contract. Twitter could seek more than the $1 billion fee in court, up
to and including the full $44 billion Musk promised in April to pay. Bret
Taylor, Twitter's Chairman took to Twitter to announce that they would seek a
legal battle and suggested the social media companies odds are in favor of a
win in court.
What
will this do to the company, the shareholders, and the employees? Friday when
Musk announced that he was terminating the deal, Twitter stocks fell more than
6% in after-hours. Along with a falling stock, Twitter recently has laid off
multiple executives, members of their talent acquisition team, and placed a
general hiring freeze for any new talent to come aboard.
Does
any of this change the shape of social media? Musk has given some insight into
what his plans are once he oversees the social media company. Twitter Blue is
the premium subscription service that Musk feels lowering the cost and getting
rid of adverts could help drive income for the company. However, 90% of the
current income comes from adverts and if Musk wants a "free debate space" he
may have to lower his expectations.
Shareholders
are expected to vote later this month on whether they are in favor of the deal.
If Twitter can produce the documents requested by Musk, then the deal will
likely go through. Elon Musk could add to his catalog of companies and grow in
wealth to become a symbol for all.
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