Elon Musk announced the purchase of Twitter in April, but abandoned the acquisition in July for questioning the platform’s numbers
On the 30th, about a week before Elon Musk announced that he had given up on buying Twitter, he admitted to the company’s executives that he had not read the details of how the network calculates the number of fake users.
That’s a key point in the business: how many bots on Twitter aren’t real people. From the beginning, Musk argued that one of his goals in acquiring the company was to get rid of these bots. Now, he claims that Twitter refused to present an accurate account and that, therefore, withdrew from the acquisition.
A $44 billion deal thrown out because, according to Musk, the problem of fake accounts may be serious. The same problem he recognized from the beginning. The problem that, incidentally, first motivated him to buy Twitter. And while the billionaire was complaining in public, he was completely uninterested in looking into the matter in more detail in private.
Twitter has already filed a lawsuit against Musk. He went to the Delaware State Court of Chancery to compel him to complete the takeover he had committed to. This court, appointed for any disputes in the contract signed by both parties, is usually quite strict. At the outset, the agreement provides for a fine of US$ 1 billion if the purchase does not occur due to the withdrawal of one of the signatories.
Musk will be lucky if he only needs to pay that amount. And he will hardly get out of this mess without having his image tarnished, both public and reputation in the environments where money circulates.
According to the lawsuit filed by Twitter, the billionaire began to back out of trading when stock markets around the world plummeted. Your money is in Tesla stock.
It turns out that there is a signed paper and Musk may have to pay much more than the fine. His actions since the deal was signed, making jocular comments and publicly humiliating the CEO, have contributed to devaluing Twitter. Shareholders now want redress. A judge can determine compensatory damages that can run into the tens of billions of dollars. Or, if you find it difficult to calculate the size of the damage, you can force him to make the purchase.
Musk has behaved in such an erratic and undignified manner that it will make many people think twice about doing business with him. If ordered to compensate Twitter shareholders, he will be forced to suddenly sell a large amount of Tesla shares. Which will devalue the company’s shares barbarously. And, thus, it will attract another lawsuit, from shareholders of the automaker, who will also have many reasons to complain.
If the disaster costs $1 billion for Musk, it will be cheap.