{"id":478352,"date":"2022-07-27T11:30:24","date_gmt":"2022-07-27T08:30:24","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/twitters-beef-with-musk-hurts-shareholders-a-court-case-wont-solve-that\/"},"modified":"2022-07-27T11:30:24","modified_gmt":"2022-07-27T08:30:24","slug":"twitters-beef-with-musk-hurts-shareholders-a-court-case-wont-solve-that","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/twitters-beef-with-musk-hurts-shareholders-a-court-case-wont-solve-that\/","title":{"rendered":"#Twitter\u2019s beef with Musk hurts shareholders \u2014 a court case won\u2019t solve that"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3dd1b84b43f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3dd1b84b43f\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/twitters-beef-with-musk-hurts-shareholders-a-court-case-wont-solve-that\/#%E2%80%9CTwitters_beef_with_Musk_hurts_shareholders_%E2%80%94_a_court_case_wont_solve_that%E2%80%9D\" >&#8220;Twitter\u2019s beef with Musk hurts shareholders \u2014 a court case won\u2019t solve that&#8221;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/twitters-beef-with-musk-hurts-shareholders-a-court-case-wont-solve-that\/#Algae-made_glass_and_cows_blood\" >Algae-made glass and cow\u2019s blood?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/twitters-beef-with-musk-hurts-shareholders-a-court-case-wont-solve-that\/#Finding_value\" >Finding value<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/twitters-beef-with-musk-hurts-shareholders-a-court-case-wont-solve-that\/#Protecting_shareholders\" >Protecting shareholders<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CTwitters_beef_with_Musk_hurts_shareholders_%E2%80%94_a_court_case_wont_solve_that%E2%80%9D\"><\/span>&#8220;Twitter\u2019s beef with Musk hurts shareholders \u2014 a court case won\u2019t solve that&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div id=\"article-main-content\">\n                            Elon Musk\u2019s recent highly public back and forth with <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a> has given the market whiplash. Twitter, while initially <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/uk.pcmag.com\/social-media\/139846\/twitter-tries-to-stymie-elon-musks-takeover-bid-with-poison-pill-plan\">resisting<\/a> the tycoon, went on to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.npr.org\/2022\/04\/25\/1094604406\/twitter-elon-musk-deal\">sign<\/a> an agreement with him worth US$44 billion (\u00a336.6 billion) in April 2022. The deal placed a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.barrons.com\/articles\/twitter-stock-price-elon-musk-deal-51650874418\">38% premium<\/a> on Twitter\u2019s then-share price. While the market would expect value to be added on a deal like this, more recent events have pushed the premium up even further. This will not benefit shareholders on either side.<\/p>\n<p>Much has changed since Musk\u2019s April offer. <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">Technology<\/a> stocks have taken a beating due to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bbc.co.uk\/news\/technology-62265756\">fears of a recession<\/a>. Big tech has lost an average of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/00f6f7de-3d84-419f-bd05-07583a3345c7\">26%<\/a> in value, while many smaller tech stocks have lost up to 70%. Tesla shares, which Musk was <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cbsnews.com\/news\/elon-musk-twitter-hold-negotiation-discount-deal\/\">using to back<\/a> his Twitter deal, have not been spared either as prices nearly halved between early April and late May, although they have recovered slightly since.<\/p>\n<p>Share price gains made by Twitter following <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2022\/05\/16\/twitter-stock-sheds-all-of-its-gains-since-elon-musk-disclosed-stake.html\">Musk\u2019s announcement<\/a> have been lost, while its management says the platform has spent <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bbc.co.uk\/news\/technology-62265756\">US$33 million<\/a> on the deal and has <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2022\/07\/22\/twitter-twtr-earnings-q2-2022.html\">blamed<\/a> the resulting uncertainty for a recent fall in revenues. Accounting for the effect of the tech stock drop on Twitter\u2019s pre-deal share price, the premium to be paid by Musk will now be significantly higher than the original 38% if the deal goes ahead.<\/p>\n<div class=\"inarticle-wrapper channel-cta\">\n<div class=\"ica-text\">\n<h4><span class=\"ez-toc-section\" id=\"Algae-made_glass_and_cows_blood\"><\/span>Algae-made glass and cow\u2019s blood?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Experts and artists discuss the future of sustainable material design<\/p>\n<\/div>\n<\/div>\n<p>The tycoon and his lawyers have cited reasons <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2022\/07\/08\/elon-musk-notifies-twitter-he-is-terminating-deal.html\">unrelated<\/a> to the change in the deal financials for Musk\u2019s retraction of the offer in July \u2013 chiefly the need for more information on spam accounts. Twitter is now using legal action to try to force Musk to complete the purchase and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.theguardian.com\/technology\/2022\/jul\/19\/elon-musk-delay-trial-denied-twitter-takeover\">a US judge<\/a> has set a trial date for October. But further legal wrangling that results in a continued dive in Twitter\u2019s share price will not benefit Musk \u2013 particularly if the court forces him to buy \u2013 or Twitter\u2019s management, employees, and current shareholders. Both sides should be open to renegotiating the deal to protect the company\u2019s current and future shareholders.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Finding_value\"><\/span>Finding value<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Acquisitions are <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly strategic moves made by a company to bolster its position within an industry. Some buyers want to acquire new capabilities that would otherwise take years to build, others want to enter different markets or introduce new product lines. Sometimes, if regulators allow, companies also acquire their competitors as a means of consolidating their position in a market.<\/p>\n<p>These deals are typically done with the intent of mutually maximizing shareholder value. The acquired company\u2019s shareholders hope to benefit by selling at a premium, while the acquiring company\u2019s shareholders want to own a piece of a more powerful and competitive firm. This <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lies even to Musk and his shareholders in this deal who, although a loose collective rather than a company, were set to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/what-elon-musks-us-3-billion-twitter-deal-means-for-him-and-for-social-media-180742\">gain<\/a> quite a lot when they made the offer to acquire Twitter in April.<\/p>\n<p>As it currently stands, however, the Twitter deal will not mutually maximize shareholder value. In fact, the gain of one set of shareholders could come at a clear loss to the other.<\/p>\n<p>If Twitter can successfully enforce this acquisition through the legal system, Musk and his shareholders would have significantly overpaid for the social media platform based on its value in today\u2019s market. The feud has also taken a significant toll on <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.wired.co.uk\/article\/as-elon-musk-walks-twitter-workers-say-no-ones-in-charge\">employee morale<\/a> and retention at Twitter. As such, even if Musk is forced to buy the company, Twitter could be in a worse condition than when he originally bid for it. It could be argued that this is Musk\u2019s own doing following his decision to walk away from the deal, but most shareholder-focused managers probably would have done the same given the shift in financial incentives.<\/p>\n<p>On the other hand, if Musk does not buy Twitter, the current shareholders may see market capitalization (or the value of all shares) slide further. It is highly unlikely that in the current economic climate there are any other contenders who would be willing to pay Musk\u2019s original price for Twitter. This is why Twitter management is aggressively pursuing a legal route as the only realistic option to maximize return for its shareholders. If the deal does go through they will not have to deal with the ramifications of managing a disgruntled workforce, however, unlike Musk.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Protecting_shareholders\"><\/span>Protecting shareholders<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.gamesindustry.biz\/articles\/2022-02-08-nvidias-acquisition-of-arm-cancelled-due-to-significant-regulatory-challenges\">change of heart<\/a> about an acquisition is certainly <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.siliconrepublic.com\/business\/zoom-five9-acquisition-cancelled\">not uncommon<\/a>. And safeguards are put in place to prevent deals from collapsing. In the case of the Twitter deal, there is a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.marketplace.org\/2022\/07\/08\/why-musk-may-have-to-pay-1-billion-if-he-abandons-twitter-acquisition\/\">US$1 billion<\/a> breakup fee. Under normal circumstances, this would have been enough incentive for both parties to complete the deal. But given the financial chasm that exists between April and today, Musk may prefer to pay the breakup fee versus the US$44 billion bill for Twitter.<\/p>\n<p>One way to protect shareholders from the effects of this kind of market volatility is to strike a deal for a mix of stock and cash. This way the value of the offer is spread between the two elements rather than being solely based on one or the other. Unfortunately, the Twitter deal is entirely cash based because Musk wanted to take the social media platform <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/eu.usatoday.com\/story\/tech\/2022\/04\/28\/elon-musk-twitter-private-shareholders\/7448055001\/\">private<\/a> to \u201cprotect <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.prnewswire.com\/news-releases\/elon-musk-to-acquire-twitter-301532245.html\">free speech<\/a>\u201d. Leaving stock on the table could curtail such a plan and so he may be reluctant to renegotiate that element.<\/p>\n<p>As such, buyers and sellers should keep an eye on the market and remain open to a price renegotiation if conditions change as significantly as they have in the past few months. Since the legal opinion on whether Twitter will win its case is <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/6d4db881-0442-4b62-b809-70c9bad9918d\">ambiguous<\/a>, everyone involved may benefit more from collaboration. Although a clear winner could be declared in court, both sets of shareholder interests are more likely to align in backroom negotiations.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img decoding=\"async\" loading=\"lazy\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"js-lazy\" src=\"https:\/\/counter.theconversation.com\/content\/187360\/count.gif?distributor=republish-lightbox-basic\"\/><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https:\/\/theconversation.com\/republishing-guidelines --><\/p>\n<p><noscript><img decoding=\"async\" loading=\"lazy\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;\" src=\"https:\/\/counter.theconversation.com\/content\/187360\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"\" srcset=\"\"\/><\/noscript><\/p>\n<p><em>This article by <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/hamza-mudassir-806042\">Hamza Mudassir<\/a>, Lecturer in Strategy, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/cambridge-judge-business-school-2729\">Cambridge Judge Business School<\/a>, is republished from <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\">The Conversation<\/a> under a Creative Commons license. Read the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/shareholders-are-suffering-most-from-elon-musks-twitter-feud-heres-why-both-sides-must-renegotiate-the-deal-187360\">original article<\/a>.<\/em>\n                        <\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/technology\/\" target=\"_blank\" rel=\"noopener\">Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thenextweb.com\/news\/twitter-beef-musk-is-hurting-shareholders-court-case-wont-solve\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Twitter\u2019s beef with Musk hurts shareholders \u2014 a court case won\u2019t solve that&#8221; Elon Musk\u2019s recent highly public back and forth with Twitter has given the market whiplash. Twitter, while initially resisting the tycoon, went on to sign an agreement with him worth US$44 billion (\u00a336.6 billion) in April 2022. The deal placed a 38%&#8230;<\/p>\n","protected":false},"author":1,"featured_media":478353,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/img-cdn.tnwcdn.com\/image\/hardfork?filter_last=1&fit=1280,640&url=https:\/\/cdn0.tnwcdn.com\/wp-content\/blogs.dir\/1\/files\/2022\/04\/Untitled-design-83-1.jpg&signature=54d2d8f85d4f21acb117bcdef1092ab5","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-478352","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/478352","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=478352"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/478352\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/478353"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=478352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=478352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=478352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}