Musk proposed a bigger deal than a business deal at one point. He claimed in April that the social network was crucial to the cause of global freedom. He said that the company had been overrun by spammers, that it was biased against conservatives, and that it had been bitten by the woke mind viruses. His offer of $54.20 per share was a significant premium on the company's share price at the time. He said at the conference that he didn't care about economics at all.
After the stock market went down, Musk cared a lot about the economics of the deal. In a July 8 letter, his lawyers announced that he was pulling out of the acquisition because they claimed that he had been lied to about the amount of junk mail on the platform. The board pointed out that the merger agreement gave Musk no wiggle room. The lawsuit was filed four days later to try to get him to pay. The legal battle, in which a judge will decide if Musk has to follow through with his offer, will be a continuation of the reality showesque circus that surrounds the buyout. It is a weird edge case and who will win is unknown. Everyone but Musk is the loser.
Shareholders are the most obvious victims. Some Musk superfans bought in based on their promises. They, along with pension fund managers and everyone else, were forced to watch as the world's richest man trolled his future employees and mocked the company on social media.
Eager, it seems, to find a pretext that would allow him to avoid overpaying, and perhaps a bit bored with the whole escapade, Musk began to insult the company he had once praised. He said that the social network wasn't a free-speech bulwark but just a spam factory. He didn't offer any evidence to back up his claim or to prove the figure he had been told was less than 5%. One of the reasons he bought the company was that it had too much email.
On the first day of trading, the stock price of the social media company dropped more than 10%. The shares are more than 30% below their value. If he is able to escape, they will fall even further. Musk turned a company into a laughing stock. Better Markets is a Washington, D.C., nonprofit that advocates for reining in Wall Street and corporate excesses. Musk was accused of creating a spectacle and then refusing to honor legally binding obligations. Musk thinks that he is free to change his mind, trash the company, destroy stockholder value, and walk away from the company. Musk hasn't responded officially yet. He commented on the suit being filed. I don't know what to say
If the board allows Musk to walk or negotiate a lower price, shareholders have the option of filing a class-action lawsuit. These antics have hurt many others. The way he is playing with the livelihoods of employees is disgusting. The company has laid off a third of its recruiting team since Musk made his offer. Product development is on hold due to the possibility of a takeover. If Musk prevails in court, employees will see the value of their stock options collapsing, while if the board prevails, they will be working for a CEO who has spent months dunking on them.
There is a place in the larger media landscape for the thing Musk was said to be worried about. He was correct when he said that there is an important role played by the social media site. Policy decisions made by the company have political consequences. Conservatives should feel betrayed by Musk's change of heart. Donald Trump said at a rally in Alaska that he was a bullshit artist. The behavior of Musk has made it harder for the company to crack down on right-wing misinformation. The digital town square is not as good as it could be.
The social hive mind likes to say that Musk has decided to use it as a means of communication. On July 11 he posted a meme that suggested his decision to back out of the deal was to get Twitter to reveal embarrassing information. He posted a picture of a chess player. His followers and some within conservative media seemed to eat this up, as have allies in Silicon Valley, who have urged the board to let Musk walk away.
Wall Street is starting to think about the inevitable initial public offering of Musk's rocket company, and the commissions that will come from whatever else he attempts to buy. Susan Wolford, who ran the tech group at Bank of Montreal, said that the guy is still worth billions. When he wants to do the next deal, you have to call him.
What happens in Delaware is important. The past four years have seen Musk and his supporters ignore basic business rules, attack financial regulators, and promote acryptocurrencies. Musk had to pay a settlement to the SEC as a result of the lawsuits that resulted from these shenanigans.
This hasn't stopped him from continuing. If he succeeds in getting out of the merger agreement based on a flimsy pretext, that will send a message to other would-be norm breakers. Top-tier companies rely on a small number of lawyers and bankers. It will change their risk-reward calculations if people get away with it. Musk won't be the last billionaire to play with a public company for his own amusement.
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