Following Elon Musk’s announcement that he would withdraw his $44 billion offer to purchase Twitter, the fate of the significant social network will be decided by a protracted legal struggle, potentially involving months of costly litigation and discussions, between top attorneys from both sides.
Twitter’s board said it was confident the company would win the case, but analysts warn that Musk’s move sets the stage for a turbulent period, which could bring new financial risks for the company and its employees.
Most legal experts agree that Twitter has the advantage, in part because Musk has attached few terms to his acquisition of the company, which appears intent on closing the deal.
The social media platform‘s board replied that it will sue Musk in Delaware court to force him to close the purchase, knowing that the terms of the agreement grant Musk the right to break the deal by paying a penalty of $1 billion, but only under specific circumstances.
“This was a worst-case scenario for Twitter, and now it has happened,” said Dan Ives, managing director and senior equity research analyst covering the technology sector at Wedbush Securities.
The deal angered several Twitter employees, who said negotiations with Musk brought intense scrutiny on the company. A dip in its stock would affect their compensation, adding to the discontent of those who were greatly concerned about the possibility of Tesla’s CEO taking over the company they work for.
Instead of getting into a drawn-out argument with the richest guy in the world and his legions of hard-line supporters, Twitter may feel compelled to reach a quick and amicable agreement with Musk, backed by a fleet of top bankers and attorneys.
Legal experts opined that Musk’s inclination to concede may be a ruse to get Twitter to the negotiating table once more in the hopes of securing a lesser price. As long as the agreement remained in place, Musk’s bid was the best Twitter could hope for because no other buyer emerged to take Musk’s spot.
As Twitter suffers financial difficulties, the reduced price would benefit Musk and his funders. However, as the deal’s collapse would be the most detrimental to Twitter, the firm has made it apparent that it seeks to push Musk to keep to his $44 billion offer.