- Kyle Chua
Elon Musk May Acquire Twitter at Even Lower Price With Latest Move
Is Elon Musk truly done trying to acquire Twitter? Perhaps not.
The Tesla and SpaceX CEO said last weekend that he was pulling out of his US$44 billion deal to acquire Twitter, seemingly expressing buyer’s remorse over disagreements with the number of fake accounts plaguing the platform. Despite this, the deal may not be over just yet, with some experts seeing this latest move as a bargaining tool for the world’s richest man to buy the company at an even lower price.
This is, of course, just speculation for now, but until talks between both sides end, there’s still a chance that a deal could be struck. And the two sides are likely to continue talks, with both planning to take each other to court over the current disagreements.
The luxury giant LVMH Moët Hennessy Louis Vuitton was in a similar position as Musk when it announced it was acquiring U.S. jeweler Tiffany & Co. for US$135 a share in cash, which totals to US$16.2 billion. The pandemic, however, hit the luxury retail industry hard, with sales of almost every kind of good being down across all markets. This supposedly made LVMH reconsider the merger deal, which sent Tiffany’s stocks tumbling. After another messy negotiation process, LVMH ultimately bought Tiffany at a discount of US$420 million.
"This stuff is a bargaining move in an economic transaction," Charles Elson, a retired professor of corporate governance at the University of Delaware told The New York Times. "It’s all about money."
Musk and his team are probably hoping to also secure a discount by suddenly cancelling on the deal. These are said to be common resolutions to such disputes. But Twitter, as of writing, doesn't seem to want to renegotiate the price and looks to force Musk to pay the initially agreed upon US$44 billion.
Negotiations between the two sides haven't been going smooth. Musk already has a couple of lawsuits on his plate since announcing his bid to take Twitter private. One of which was filed by a Twitter shareholder, alleging that the controversial tech executive did not immediately disclose his 9.1% stake in the company to bring its share prices further down.
There's also the possibility that deal will simply fall through, if Musk is indeed serious about backing out from it.
What seems likely to happen at this point is that both parties will meet at court to try and settle their disputes with one another. The merger agreement, which both Musk and Twitter signed, states that if either side tried to pull out, they're liable to pay a US$1 billion fee to the other party.
Twitter said publicly that it estimates only 5% or so of the platform's daily users are bots. Musk disputed this claim, saying he believes the number is much higher. He's now using this as the primary reason for why he's ending the deal.
Elon Musk said last weekend that he was pulling out of his US$44 billion deal to acquire Twitter over disagreements with the number of fake accounts plaguing the platform.
Despite this, the deal may not be over just yet, with some experts seeing this latest move as a bargaining tool for the world’s richest man to buy the company at an even lower price.
The luxury giant LVMH Moët Hennessy Louis Vuitton scored a US$420 million discount in buying Tiffany & Co. last year, after initially cancelling on the deal.