Billionaire Elon Musk looks on
Source: Wikimedia | Sikander

Elon Musk Is Trying To Weasel Out Of Twitter Deal, Legal Expert Says

Damir Mujezinovic - Author
By

Jun. 8 2022, Published 10:12 a.m. ET

Twitter officially accepted a $44 billion buyout offer from Elon Musk, the founder and CEO of Tesla and SpaceX, in April, but the deal has yet to be finalized.

After appearing exceptionally interested in completing the deal as soon as possible, Musk backed away, accusing Twitter of resisting his requests for more information about bots and spam on the platform.

Some experts now believe Musk is simply looking for a way to weasel out of the deal.

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Buyer's Remorse

Ann Lipton, associate dean for faculty research at Tulane Law School, said in a new interview that Musk either has "buyer's remorse" or is trying to renegotiate the deal at a lower price.

"If Musk wants [Twitter] because he likes the company, but not because he plans to make it more profitable, he’s going to have trouble getting in other investors to pick up the slack," Lipton told Quartz.

"So yeah, it seems like a buyer’s remorse situation," she added.

Termination Fee

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Source: Shutterstock | 190102270

Bust Musk can't just walk away from the deal he made -- if he actually did that, he would have to pay a $1 billion termination fee.

Even in that scenario, Twitter would have no reason to settle immediately, according to Lipton, because their interest is "getting the highest price for their shareholders."

"And as long as they think his claims are legally weak and could be resolved quickly in court, they have no reason to settle," the legal expert explained.

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Other Possible Scenarios

What are some other possible scenarios?

As Lipton explained, if Musk is actually right and Twitter is refusing to disclose the number of fake and bot accounts on its platform, then he might be able to back out of the deal.

"So if it’s true that Twitter is not providing information necessary to get the debt financing, then that gives Musk grounds to terminate the agreement and Twitter can’t sue for specific performance," the legal expert said.

"I have significant doubts that it is true," she added.

Is Musk Right About Bots?

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Source: Wikimedia | Corevette

Twitter says that less than five percent of the accounts on the platform are bots, but some experts dispute this claim, though they acknowledge the company has made significant progress in addressing spam in recent years.

One former Twitter employee told The Washington Post that five percent is a "very opportune and chosen metric," and another individual familiar with the matter agreed.

Kathleen Carley, a computer science professor at Carnegie Mellon, said that some studies show the percentage of bot accounts on Twitter could be as high as 35 percent.

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