Elon Musk was going to struggle to win in Delaware. He had signed a binding agreement to buy Twitter for $44 billion and make his reasonable best efforts to complete the deal. He said he didn't want to buy it any more, he wasn't going to work in Delaware, the state where Twitter is incorporated and one that carries a reputation for making sure company transactions happen.
And so it appears that Musk has chosen the least bad option, which is going ahead with the deal before spending millions of dollars trying to convince a judge that he should be allowed to walk away, even though he had no grounds to do so.
Twitter s response to Musk's formal offer to complete the deal is to the point: it intends to close the deal at $54.20 per share, as it always has done. It just won't have to go to court to finalise the obvious that Musk has to complete a deal he signed up to with minimal due diligence.
Brian Quinn, a professor at Boston College Law School, says that Musk was choosing the cleanest outcome. The discovery process, which is a pre-trial phase of a lawsuit, did not yield any solid evidence that Twitter had suffered a company material adverse effect that would affect the value of the business and allow Musk to walk away.
The discovery process did not turn up any of the potential smoking guns that would have been necessary for him to win, so it was very unlikely that he would win on merits, says Quinn. This outcome is likely to be the best way to finish this cleanly, although not necessarily inevitable. Quinn says that if there is a stay in legal proceedings as referred to in Musk's letter, Twitter could relaunch the process quickly if Musk wobbles again. Twitter has acknowledged Musk's offer and said that the company intends to close the deal, but it has not given any further details, suggesting that Musk's behaviour in recent months has eroded trust between both sides.
Musk appears to be on the verge of buying a business that he has shown little love for since he agreed to acquire it. Peiter Mudge Zatko, the former head of security at Twitter, portrayed a chaotically managed business in his whistleblower complaint against the company. Twitter strongly disputes Zatko's allegations but they have put the company under pressure and it is hard to see how Musk is going to lift morale.
If Musk takes over the company, his number one mission must be to earn and retain the trust of Twitter's employees, according to Mike Proulx, a research director at the analysis firm Forrester. He will be starting from a large trust deficit, and that is no small task. Without an engaged employee base, Twitter's future is bleak and there needs to be a lot of repair work done there. Musk's plans for Twitter will now be scrutinised again. There were fears that Musk, a self-confessed free speech absolutist, would water down moderation guidelines at the platform. The discovery process has revealed a text from podcaster Joe Rogan to Musk that asks Are you going to liberate Twitter from the censorship happy mob? After agreeing to buy Twitter, Musk tried to clarify his position on free speech, saying he was against censorship that goes beyond the law. The law on social media content is getting tougher in the UK and in the European Union due to the digital services act.
The bill, whose progress through parliament has been temporarily paused, wants to protect freedom of expression and free speech, according to the UK government. Musk is going to be the next legal reckoning after Delaware, due to a change in the online regulatory environment for the UK and the EU.