Delaware’s Chancery seems like a fitting place to hear the arguments of a billionaire no one believes in.
Elon Musk’s attempt to walk out of his $44bn (€44.16bn) Twitter acquisition contract seems impossible.
He paid more. he knows it. We know it. Twitter knows it. And there’s little chance a Delaware court will let him get out of it.
Remember why he said he wanted to buy it in the first place? This was to rid the platform of spam bots. Now he claims there are more spam bots than he actually thought. So many in fact, that it should cancel the sale.
I cannot stress this enough: no one believes him.
It’s not like he hasn’t presented a piece of evidence to back up his hasty allegations of spam bots exceeding Twitter’s 5pc estimate.
This is how anyone with a working frontal lobe can see that they agreed to buy it just before the tech stocks fell.
Now $10 billion has gone out of his pocket. Even for the richest man in the world, it’s worth trying to get out of it.
But that’s why he won’t win.
His case is based on two main legal arguments. First, the high number of spam bots exposed could have materially affected the value of the company it agreed to buy.
They have an almost impossible task in proving it. He can’t prove that Twitter has more spam bots than 5pc estimated.
Even if he could, it would have to be wildly outnumbered for it to “materially” affect the value of the company.
In other words, it has to show that Twitter advertisers are going big because of newly uncovered spam bots. That’s why he won’t win there.
The second reason is more of a chance, at least theoretically.
If he can prove that Twitter hasn’t met reasonable requests for information, or keeps him updated about important things going on at the company, he may be entitled to retract. It seems that Musk is relying on some unanswered, or partially answered, questions about data quality. He also says that the sacking of two Twitter executives deserves that they should have been kept as such.
But again, Musk’s problem here is proportionality. Twitter has generally gone out of its way in giving Musk access to his data.
This culminated in an extraordinary look at its raw ‘firehose’ data as it hits Twitter’s servers. For Musk to argue that “reasonable” requests about data quality have not been satisfied, would be a tall order.
Likewise, it’s hard to know what Musk might be able to do about a company letting go of the two executives. He could not object or influence the process. Therefore, it is very difficult to see the Court deciding that any of these claims are sufficient grounds for voiding such a large contract.
In the end, Musk may finally be the victim of his own slander. Even if there was some water in his case, a Delaware court would be fully aware that the world is looking into and dealing with the matter.
In many ways, it is Delaware Chancery’s reputation that is on test here as well.
Delaware, for those unfamiliar with the tiny state, is primarily known as a place to go for the formation and regulation of companies—be it Stripes Atlas or start-ups.
Is this a place to be known as the cave of a billionaire bully’s antics? If anything, couldn’t there be a subconscious bias in the opposite direction? That the court is above such noise and a place of quiet continuity?
Right now, all signs point to an outright Twitter win or a renegotiation of the buy price. I’ll bet the latter is the more likely option.
Musk has the means to get it out for months, or even years. It can ruin the company. There are already reports of demoralization and departures in the company.
Everyone I know in the Dublin operation – which employs 500 people – is disappointed with what is happening. It doesn’t help that Musk is brushing off the logic behind the bulk of the work in the Dublin office.
Shareholders, too, may decide that Musk’s Mad Dog online behavior suggests he’ll shoot the case out like a soap opera—until he either gets his way, or the company is actually Got hurt
This may encourage them to accept a revised – reduced – offer for the company.
For users of the service, the forecast is much less clear.
What started out as a party – ‘We finally got an edit button!’ – Now it is starting to look like the real Truj.
Again, Twitter’s resilience may be a silver lining for the same thing that has kept its earning potential so far below other platforms. It is, at its core, a very simple platform dominated by a scroll of short posts.
It’s hard to mess it up completely.
And that may be the thing that keeps it watered down now while its corporate future is sluggish.