In March, Elon Musk began to make hints that he wanted to buy Twitter. In April, he made that offer formal, extending an offer that valued the company at $54.20 a share. Yes, that is a 4/20 joke in the middle of a $44 billion business deal.
Why did Musk make such an offer? For the same reason he does anything: Because it amused him to do so. As Bloomberg points out, this is a man who has both sold flamethrowers and bought a tunneling company to complete a joke. Everything Musk does is to satisfy a whim, and this isn’t the first time he’s made noises about plunking down cash for a publicly traded company only to change his mind when the impulse had passed. It didn’t seem to have taken long after that initial offer before Musk realized that running Twitter looked like a lot of work, and rather than working to buy the company, he began looking for ways to break his own deal.
But there’s a third party to all this. Along the way, Musk promised that when he had the keys, he would let Donald Trump drive again. One chaos agent to another, it amused Musk to let Trump return to Twitter—not incidentally adding many of Trump’s former Twitter followers to his own in the process. Only now that Musk is trying to walk away from his deal, those followers are turning on Musk. So is Trump.
Even as Musk tries to avoid paying $44 billion on a joke he no longer finds funny, he’s also becoming part of a heavyweight troll-on-troll fight. Twitter is absolutely done humbling itself to please Musk. Trump is unloading on him. Musk is hate-tweeting everyone on the same platform suing him to go through with his promises. And at the moment it’s not clear if Musk will pay the price, or if everyone will.
There’s a lot of similarity between Donald Trump and Elon Musk. Both are unrestrained monsters of the id, giving free rein to their impulses and ignoring the negative consequences of their actions. In the intervals between snit fits things occasionally get done, but for every real accomplishment, each tosses off a hundred promises that excite and enflame. And the more attention is given to either, the greater the ratio of braggadocio to reality.
In the case of Musk’s pretend purchase of Twitter, the hogwash seemed to be flowing in parallel streams. No sooner had Musk started hinting about a hostile takeover of the platform than Trump supporters began fantasizing about a return of Trump to Twitter. Trump shared in that fantasy, because anything beats screaming into the void at Trump’s own rickety and wasteland, Truth Social.
A few weeks into this extended joke, Musk even flatly stated he would restore Trump to his Twitter throne. The drool from the right wing became hip-deep, and Musk’s own follower count, by an absolute noncoincidence, swung above 100 million.
But by then, Musk was already seeing that the reality of owning Twitter looked like a big pile of no fun. It was extremely obvious with each passing day that Musk wasn’t interested in finding out about the inner workings of Twitter to prepare for running the company. He was a man in search of an exit.
Now that Musk has made his intention to bail explicit, it’s not only broken the heart of his new Trump-scented army, it’s incurred the wrath of Trump, who clearly had his bags packed for a return to visibility. Unsurprisingly, when dealing with two men who both believe the only response to the slightest offense requires nuclear weapons, there has been a rapid breakdown of relations. At an Alaska rally, Trump called Musk a “bullshit artist.”
Musk’s response seemed to come from whatever alternate universe he has launched himself into. “I don’t hate the man,” tweeted Musk, “but it’s time for Trump to hang up his hat & sail into the sunset. Dems should also call off the attack – don’t make it so that Trump’s only way to survive is to regain the Presidency.” Anyone who can figure out what that last part means wins a free trip to Mars, a self-driving car, and a robot servant.
As replies between guys like this goes, it was amazingly mild. Trump, of course, responded by being … Trump. As Yahoo reports, that means a long post in which Trump accused Musk of begging for help for his “his many subsidized projects” including “driverless cars that crash, or rocketships to nowhere.” Trump went on to say that Musk would be “worthless” without those subsidies, that he had told Trump that he was a big fan, and “I could have said, 'drop to your knees and beg,' and he would have done it.”
But Trump’s ire is unlikely to be Musk’s primary concern at this point. His bigger problem comes back to that $44 billion offer and how Twitter is now suing him to make him go through with it.
Earlier this week, Musk filed the paperwork to end his attempted purchase, using claims that Twitter has a much higher level of “bot” accounts than they have admitted and that Twitter withheld information during his attempted purchase. Musk’s attorneys also threw in a few claims about Twitter losing employees—almost all of whom fled from Musk.
On Tuesday, Twitter’s attorneys filed their sizzling reply, saying that “Musk apparently believes that he—unlike every other party subject to Delaware contract law—is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
Going through the assessments from New York magazine, CNN Business, and Bloomberg, it’s clear that most experts in business law believe that the advantage here lies strongly with Twitter. There seems almost no chance that Musk will walk away without paying at least the $1 billion exit fee included in the original agreement, a fair chance that Musk will be ordered to go through with the $44 billion purchase—even though both Twitter’s value and Musk’s own wealth have taken some serious hits—and a very good chance that Musk will end up settling for something in between.
A few key points:
- Yes, Musk, as mentioned in the suit from Twitter, made his offer on a “take-it-or-leave-it basis in an unsolicited public offer” with “no financing contingency and no diligence condition.” This, however, doesn’t mean there is no basis on which he can complain. Twitter is still expected to have been honest in its filings to the SEC, and those SEC filing contain estimates of around 5% for bot accounts. If Musk could show that Twitter deliberately lied about that number, he would have some leverage. But not a lot. Because Twitter also included in those SEC filings how it calculated the number, and neither Musk nor any of his supposed experts has showed that Twitter was deceptive about any of it.
- Musk’s best odds of getting out of this without losing billions are in the idea that Twitter failed to give him everything necessary when it came to information. That would be a legit get-out-of-deal-free card. However, there’s a big problem in this for Elon. First is that it’s clear Twitter was cooperating, but that Musk increasingly went on a fishing expedition, asking for more and more esoteric and complex information. Second, and even more important, it’s clear that Musk wasn’t using this to complete the transaction, which is what the law calls for. Instead, Musk was asking for information explicitly to use in ways that could get him out of the deal. More than that, he was publishing information, sometimes right on Twitter, that was obviously aimed at hurting Twitter and souring the deal. Not only is that not a legitimate attempt to collect information, it’s something that Twitter can definitely use in its suit.
- Right now on Twitter, Musk’s new army of followers is bragging that Musk only started this whole thing so that he could get Twitter to provide him with all their internal data, which he would then use to gut Twitter’s claims about bots, sinking the company. The prospect that “Musk just did this to get Twitter into court!” and that all this is 11-dimensional chess excites his followers. Except that is @#$@ing illegal, and the Delaware Court of Chancery will concoct numbers that have many zeros after them if evidence makes it seem there’s any truth behind this idea. The SEC would also be extremely interested in such a claim—enough that Musk’s days of being an officer for any publicly traded company would likely be numbered in the nones.
- Musk could attempt to get out of this by blowing up his own financing. Which would seem to leave the idea of his being forced into buying Twitter for the agreed on price off the table. But he’d still be on the hook for that $1 billion fee and for anything else Twitter can collect in a suit.
- All of this nonsense has caused genuine damage to Twitter. It’s also caused damage to Musk and to Tesla. It may have even contributed to the crypto crash since Musk is so widely connected with the scam. But there is also a threat that it could damage something else: the courts. Bloomberg speculates that Musk may get a ruling he doesn’t like and simply ignore it. How that ends is wide open. Can a chancery court order someone arrested? Can they order the richest man in the world arrested? Let’s hope we don’t go there. Delaware makes a gigaton of money from being the most straightforward place for big corporations to register and to conduct deals. Both the court and the state have a lot at stake in handling this firmly and quickly.
Musk is going to have to pay for his screwing around and pretending to have interest in buying a public company. But a lot of people—from employees to stockholders to people who never even made a dime from Twitter—already have paid. Here’s hoping he goes down. Hard.
Oh, and there’s also that other guy. He can keep whining, not that it will do him any good. In any case, getting back on Twitter should be way down in his concerns.