Musk’s Twitter turn reflects legal challenges

The news that Elon Musk has agreed to go ahead with his deal to buy Twitter for $44 billion may seem like a big surprise.

The news that Elon Musk has finally agreed to go ahead with his $44 billion deal to buy Twitter may have seemed like a stunning surprise from the brash billionaire who likes to shock.

It sent the social media platform’s stock soaring and raised alarm among some media watchdogs and rights groups, who worried about the kind of free speech on Twitter under Musk.

But it was not surprising to observers of the months-long legal battle as Twitter tried to force the world’s richest man to complete a buyout he had tried to back out of. In the months since his initial bid to buy Twitter in April, Musk has faced a huge legal challenge.

A combination of gambles or missteps and potential benefits that didn’t materialize left his hand looking weak for a trial looming in less than two weeks in Delaware’s Chancery Court. He says he will complete the deal only if the trial is delayed.

Musk immediately faced deposition in the case by Twitter’s lawyers as of Thursday.

Here’s a look at how the legal battle unfolded:

What was Musk’s main argument for backing away from buying Twitter

Musk made his argument largely by claiming that Twitter had grossly misrepresented the way it measures the size of “spambot” accounts that are useless to advertisers.

But Chancellor Kathaleen St. Jude McCormick, the court’s chief justice, apparently wasn’t buying it. As both sides presented pretrial evidence, the judge appeared to focus narrowly on the court’s mandate: on the merger agreement between Musk and Twitter and whether anything had changed since it was signed in April that would justified the termination of the agreement. .

Musk’s argument appears to have been bolstered by Twitter’s former security chief, who was fired earlier this year and turned whistleblower. Peiter “Mudge” Zatko, a respected cybersecurity expert, filed complaints with federal regulators and the Justice Department in July, alleging that Twitter misled regulators about its efforts to control millions of spam accounts, as well as its cyber defenses.

But helping Musk since Zatka’s revelations has “come a long way,” said Brian Quinn, a professor at Boston College Law School, and ultimately “didn’t change the (legal) landscape in any significant way.”

Did Musk’s approach to buying Twitter hurt or help his case?

“He was quite the cavalier,” Quinn said. Recently released text messages between Musk and others show jubilation over Musk acquiring a large stake in Twitter and joining its board. It wasn’t until after he signed the merger agreement in late April that he did what’s called due diligence, a thorough review, of the company and began filing complaints about the bots, Quinn noted. That may not have struck the judge as the right approach for someone buying a large company.

Why has Musk changed his mind now?

In addition to the impending trial and his deposition scheduled for Thursday, Musk had to face a ticking meter of potential rising interest costs. If he lost the case, the judge could not only force him to close the deal, but could also impose interest that would increase his costs. According to experts, interest probably started to build in mid-September.

But, of course, the agreement is not yet concluded and there are still legal hoops to jump through. Given Musk’s track record and volatility, it would be a mistake to assume he’s bow-tied.