On Friday, , $54.20 per share. The decision provoked the expected reaction: the social network will take legal action so that justice forces the operation to become effective. Likewise, it has given rise to new theories about the billionaire’s hidden motivations for presenting that astronomical offer and his subsequent withdrawal.
Although Musk has cited Twitter’s alleged lack of transparency about the number of fake accounts as a reason to back down, the real reason would be that he would have already achieved what he set out to do from the beginning: sell and liquidate 8.5 billion dollars. from Tesla. This is stated by Josh Wolfe, co-founder of Lux Capital, in a message posted on that social network.
Elon’s 10-year Tesla options were about to expire, so he had to sell them. The Twitter bid did allow him to do that without his facing questions about why he was selling. And he sold at an excellent price!
—Henry Blodget (@hblodget)
A theory that is also supported by Henry Blodget, founder and CEO of Business Insider, who replied to Wolfe’s tweet, pointing out that the billionaire had to sell his 10-year shares in the electric car maker because they were about to expire. According to Blodget, “Twitter’s offer allowed him to do it without him having to face questions about why he was selling. And he sold at a great price!”
Based on this theory, Wolfe estimates that Musk would walk away with more than $7 billion in liquidated shares after paying the $1 billion fine for breaching the agreement reached with Twitter.
A long legal battle ahead
Be that as it may, the Tesla CEO’s decision has left Twitter in a very difficult position, according to Ann Lipton, a professor of corporate governance at Tulane Law School, told CNBC. The reason? The social network cannot accept a lower price per share or reach a new agreement because, basically, it risks being sued by its own shareholders.
Regarding the accusations of “material breach of multiple provisions” of the agreement that Musk’s lawyers have made, specifically assuring that Twitter made “false and misleading representations” about the number of false accounts on its platform, Lipton believes that “it is not a reason to cancel a merger agreement”. To be so, the billionaire would have to present evidence showing that “Twitter’s false statements would have a long-term impact on the company’s profit potential,” says the professor.
Since Musk has yet to present any such evidence, Lipton believes that Twitter has the upper hand thanks to the “specific performance clause” included in the agreement signed between the two parties. According to that clause, the social network can force Musk to make the purchase. However, it all depends on whether the billionaire still has the funding to do it.
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