On May 13, the world watched another business news ping pong, as Elon Musk, a Tesla CEO, said he was putting his deal to buy Twitter, but later stated that he was still committed to the merger.
It was yet another chapter in a wide range of negotiations about the fate of the microblogging platform.
The deal that Musk has agreed to purchase Twitter (TWTR) in many ways is becoming more a redheaded stepchild.
It is now a problem for both investors and a market that is already concerned about stubborn inflation and a possible future recession.
Crypto''s ongoing meltdown, and you have a deal that, from fewer and fewer, wants not these Twitter shareholders, orthese Tesla''s shareholders, nor Twitter''s employees, and increasingly, not Musk himself.
So What''''s the Holdup?
A Twitter document claiming that only about 5% of Musk''s users are bots demonstrates Musk''s excuse for the latest delay.
These are a strange side feature the site has that has so enraged Musk that he designated it as one of his primary reasons for wanting the site first.
He said he would go into negotiations until he could see that number again.
The only possibility?
Twitter''s quarterly reports indicate that the bot percentage has already been shared.
While it''s certainly possible that the Musk is attempting to negotiating lower sales prices as well as Twitter and Tesla have taken significant haircuts since the $54.20 per share agreement was announced on April 14 it''s possible that he is also trying to leave the deal entirely.
According to Musk''s contract with Twitter, the company will pay a $1 billion breakup payment.
The price of retaliation of the agreement may be significantly higher than the one.
Legal fees might be incurred as a result of a Twitter breakdown.
Twitter has expressed concern about the possibility of involving Musk.
A recent document filed by Twitter with the Securities and Exchange Commission shows the company is already pricing in a possible legal battle with Musk if the merger agreement is breached.
The 10-Q, which you may read in its entirety here, was submitted for the quarterly period ended March 31.
Elon Musk may not be longer drawn out by Twitter, and Tesla might now use his focus.
Regulators have reviewed the $1 billion cryptocurrency Ponzi Scheme.
Stock Market Today - 5/13: Stocks leap as Powell raises interest rates and cryptocurrency steers; Twitter is slumps as Musk puts the company''s takeover ''On Hold''.
Twitter has also pointed out possibility of litigation relating to the merger with Musk, claiming that if the deal fails, it will likely pursue legal avenues.
The form cautions that litigation might cost Musk a lot, causing it to appoint Twitter shareholders.
"Regardless of the outcome of any future litigation related to the merger, such litigation may be tedious and costly, which may entail our employees from executing the day-to-day operations," the company says.
"We may have substantial effects on our business, results of operations, prospects, cash flows, and financial condition, due to litigation costs and diversion of management''s attention and resources to address claims and counterclaims."
On May 13, Twitter has maintained its own support for Musk''s blatant behavior.
That doesn''t mean it isn''t aware of the risks that it might be exposed if prolonged litigation fails when the agreement ends.
"Any dispute involving the merger may result in negative publicity or unfavorable impression of us, which may have an adverse impact on the price of our common stock," Twitter says in its 10-Q.
"It may sabotaging our ability to recruit or retain employees, sabotaging our relationships with our advertisers and other business partners, or significantly harmful to our operations and financial performance," a filing said.
How Expensive Could it Get?
DealRoom''s latest merger analysis reveals some of America''s biggest merger mishaps, putting the cost of the largest corporate splits on the throngs.
It ranked the top eight most costly merger failures, all of which cost billions of dollars to decouple.
Each year, the aggrieved parties discussed the maximum amount of grievance and occasionally significant details to investors and the public.
These expenses were tallied as follows as they were from this study:
- Bank of America and Countrywide (2008): $2 billion
- eBay and Skype (2005): $2.6 billion
- Mattel and the Learning Company (1998): $3.8 billion
- Microsoft and Nokia (2013): $7 billion
- KMart and Sears (2005): $11 billion
- Google and Motorola (2012): $12.5 billion
- Daimler-Benz and Chrysler (1998):$36 billion
- America Online and Time Warner (2001): $65 billion
Although Musk''s intention to purchase Twitter is centered on one of history''s largest leveraged buyouts, it also holds a lot of risks.
Although the above deals were usually between two companies, Musk''s status as the world''s richest man is tenable only as long as his stock in the companies remains trading at high levels, giving him financial liquidity and stability.
Prolonged legal disagreements even for hip companies like Tesla (TSLA) may make investors uncomfortable. Even the most stalwart Musk fan may be scared, according to a Tesla Inc report, SpaceX, Neuralink, and The Boring Company.