Twitter’s deal with Musk wouldn’t be the first to be complicated by interpersonal drama. Williams points to Disney’s acquisition of Pixar, which has stalled for years due to bad blood between Disney CEO Michael Eisner and Apple’s Steve Jobs, but passed in 2006 after Eisner was replaced by Bob Iger.
Dan Ives, chief analyst at Los Angeles investment firm Wedbush Securities, believes there are four possible outcomes of Twitter’s dispute with Musk. He estimates there’s a 20 percent chance Musk can escape the deal by either paying the $1 billion written into its terms or winning in Delaware’s chancellor court without paying Twitter a cent.
The other two outcomes, which together are much more likely, Ives says, result in Musk either buying Twitter for the agreed-upon $44 billion or leaving after reaching a settlement in which he pays the company $5 billion to $10 billion in damages. “The stock reflects the strong possibility that Musk will ultimately have to pay Twitter a hefty $1 billion settlement and may have to buy the company at an agreed-upon price,” Ives says.
The prospect of Twitter’s inverted logic taking over and Musk owning the social network he now seems to despise has some employees and users are worried. “There’s no one to put the brakes on this deal, even though it’s clear Musk is the last thing Twitter needs,” said Briana Wu, a former video game developer and founder of the progressive political action group Rebellion PAC. “Investors want it to go through. The council stands to make billions and they will go to court to force the issue.’
How does a business deal agreed to by both parties and backed by some of the biggest banks in the world turn into such a mess? Javier Marcos Cuevas, an associate professor at the Cranfield School of Management, describes the process that led to Twitter as an “escalating commitment” that forced both Musk and Twitter to reverse their original positions.
Initially, Musk had to offer a relatively high price to be considered a credible buyer, says Marcos Cuevas. “Then what could happen is that he realized, after seeing the analysts’ views on the price, that he paid too much,” he says. That sentiment would have been exacerbated by a broad decline in financial markets shortly after the deal closed. Twitter’s lawsuit alleges that this was the root cause of Musk’s bot problem claims.