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Twitter takes legal action against Musk: “With this case, the boss of Tesla has alienated the entire economic planet”

New episode in the saga concerning the takeover of Twitter by Elon Musk. The social network has just taken legal action to “force” the billionaire to finalize his takeover. As a reminder, Elon Musk had agreed at the end of April to acquire Twitter for the amount of its valuation then estimated at 44 billion dollars. But the boss of Tesla retracted last week with the justification of opacity on the number of fake accounts.

“Twitter has decided to sue Elon Musk in Delaware, State where the buy-back contract was drawn up”, asks Damien Van Achter, media entrepreneur and director of innovation and digital at Boukè (Namur). “In my opinion, with this maneuver, the social network is above all trying to give its own version of the story. Since the beginning, we have in fact witnessed two story tellings different, punctuated by eccentric tweets from the multi-entrepreneur. Twitter also wants to show Musk that it’s not that easy to walk away from the deal.”

In the coming weeks, the business lawyers of both parties will therefore not be idle, to prove on the one hand that all the information requested by Musk has indeed been communicated, or on the other hand that the number of false accounts is opaque. .

According to American law, it is theoretically possible that after the examination of the file by a judge of a court specialized in business law, Elon Musk is finally obliged to carry out the takeover. There are, however, “special events” that could put an end to the agreement, such as the infamous debate over the number of fake accounts. Often kept secret by social networks, this data directly influences the number of real active users, and therefore profitability and ultimately the valuation of the company.

Weaken Twitter

“When we want to make a takeover offer, we make what is called a due diligence by drawing up a precise inventory of the situation of the target company”, continues Damien Van Achter. “However, during this operation, Elon Musk did not formally request the figures on the fake accounts. (information not public but that Twitter would have been obliged to communicate, Editor’s note). Musk only cared about it afterwards, which is why we can think that this argument is just an excuse to speculate on the downside and withdraw his takeover offer..”

For some observers, the boss of Tesla never really intended to get his hands on the social network. “If he really wanted to redeem, despite the fake accounts, the operation would follow its normal course. It is possible that Elon Musk is doing all this circus just to prove his power by showing that he is able to raise 44 billion dollars, and to weaken the social network with which he disagrees on the principle of freedom of expression. On the other hand, if the acquisition were to materialize all the same, the current legal battle allows Musk to destabilize Twitter at the level of its internal management, with the aim of better seizing it later”analyzes Damien Van Achter. “It’s also a good way to lower the price”completes Xavier Degraux, independent consultant and trainer in social networks and digital marketing.

The two parties have until October 24 to finalize the operation as provided for in the takeover contract, which also stipulates that in the event of a breach, Elon Musk could have to pay a billion dollars in compensation.

A third actor?

For Xavier Degraux, at the end of this affair, there are three possible scenarios. First, Twitter and Musk could reach an amicable agreement in which the billionaire would have to pay compensation for the unsuccessful transaction. “The amount would surely be several billion and not a single billion, because this first amount concerned the eventuality that Musk would not succeed in raising the 44 billion, which in view of his numerous assets is not very credible”says Xavier Degraux.

Another possibility is that the takeover takes place but at a lower cost than the 44 billion dollars initially involved. “It must be said that Musk was unlucky. After making his offer, the markets and in particular technology stocks fell. This is undoubtedly why the boss of Tesla is trying, with the file of fake accounts, to buy Twitter at a more reasonable amount, which would probably be 20 to 25 billion in view of the current stock market environment”, explains the social media consultant.

Third option, it is not impossible that a third actor comes into play. A “white knight” could indeed take advantage of the mess between Twitter and Musk to buy the social network. “It will not be Meta because the American regulators would not allow it, nor Microsoft which already has LinkedIn. On the other hand, players who are not lacking in liquidity such as Google, Oracle or Salesforce could take advantage of the timing to make a good deal” .

The end of the story should therefore be pronounced this fall, unless the quarrel is prolonged by possible legal action. “With this affair, Elon Musk has just alienated the entire economic planet. concludes Xavier Degraux. And he has other business to manage with Tesla, SpaceX and Neuralink. In view of his multiple activities and the bad publicity generated by the operation, it would be better for the billionaire that the affair end quickly” .

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