Elon Musk no longer wants to buy Twitter (at this price). Trade war on the way
Late on Friday evening, Elon Musk decided to end the Twitter affair, or rather to change it, effectively violating the contract signed three months ago and making legal action in Delaware inevitable: in fact, he announced in a13D document the termination of the 'merger agreement with Twitter, claiming that “ Twitter is substantially violating multiple provisions of that agreement, ostensibly making false and misleading statements that Mr. Musk relied on when entering into the merger agreement and is likely to suffer a material negative effect of the company ".
This will expose him to heavy legal retaliation, as Elon waived all rights to rework the deal when he signed the purchase agreement on April 25, and what happens now may be:
- for a judge to enforce the initial agreement, but it will take years of lawsuits;
- that the agreement is partially renegotiated at a different price.
For now, the path chosen by the Twitter board seems to be the first, that is the direct confrontation to obtain the maintenance of the contract at the price previously agreed with Musk
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
– Bret Taylor (@btaylor) July 8, 2022
At the same time, however, it seems frankly absurd that Musk pays a price of $ 52 per share for a stock that was worth $ 36 yesterday and tomorrow will be worth $ 34, according to closed market trading. All at a time when tech stocks are losing ground and social media is still struggling. Without considering that the doubts about the number of "Fake", of fake profiles, has never been completely clarified, indeed it has become even more complex, as the censorship policies made by the social network have remained extremely questionable.
Musk's seems like a strategic retreat to break a contract that has become too expensive, not in line with market values and development prospects just as we are entering a recession that Musk expects to be very strong. Elon has repeatedly warned Tesla employees of the coming economic storm and has already started to lay off, so he expects Twitter's shares to drop further, rendering the deal unprofitable.
We'll see in the coming weeks if Musk really only wants to re-discuss the deal or if he intends to pull out of it entirely.
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Elon Musk article no longer wants to buy Twitter (at this price). Coming trade war comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/elon-musk-non-vuole-piu-comprare-twitter-a-questo-prezzo-guerra-commerciale-in-arrivo/ on Sat, 09 Jul 2022 08:26:04 +0000.