Elon Musk would like to get out of his agreement to purchase Twitter. Many in the business press initially reported that Musk had "terminated" the deal, which is a headline that may have pleased Musk but that Twitter’s lawyers would take issue with. He does not have the unfettered power to terminate a binding contract he signed with another party, though this mishigas is likely to put such basic concepts to the test.

There seem to be a few possible scenarios for the outcome:

1) Twitter wins its suit against Musk. He has to buy Twitter for $44 billion.

2) Musk gets out of the agreement and pays the stipulated $1 billion penalty to Twitter.

3) Musk gets the agreement thrown out and pays nothing.

4) Twitter and Musk come to a settlement where he buys Twitter for less than $44 billion.

5) Twitter and Musk come to a settlement where he pays a larger penalty than $1 billion.

As Matt Levine wrote in Bloomberg recently, it seems unlikely that Musk will end up owning Twitter. We can't exactly cross out 1 and 4, but for the sake of simplicity let's just assume he won’t. A settlement like 5 is somewhat more likely, while it seems that Musk is pushing for 2 or 3, which, as Levine pointed out, are functionally the same for Musk. ($1 billion isn't much different from $0 when you have many billions.) Levine broke down the legal strategies it appears Musk will pursue to extricate himself, the foremost of which—or at least the one the public will most easily latch onto—is the notion Twitter has a lot more bots than it says it does, so Musk shouldn’t have to buy it.

Levine poured some cold water on this strategy in part because by all appearances Musk is trying to malign Twitter and scupper the deal. Also, "back when he was pretending to want to buy Twitter, Musk was pretending that he wanted to buy Twitter in order to clean up the bot problem."

But this is the legal track for Musk’s strategy to get out of the agreement. In addition, for some time now it has appeared from Musk’s public behavior that he is also pursuing a second track. A lot of the discussion around this deal is premised on the assumption that Musk either went into all this on a lark and got bored, or genuinely wanted to buy and reform Twitter but can no longer swing it after the market downturn. He doesn’t appear to have done the most thorough due diligence before signing the agreement (he did not "seek from Twitter any non-public info regarding Twitter," the company told shareholders in a proxy statement). Tesla stock has been battered in recent months, and the financial markets, on which Musk’s $13 billion in debt financing depend, are far less friendly places now.

But this assumption doesn’t really grapple with his public behavior, which from almost the moment he signed the agreement has vacillated between a pair of personas, neither of which, on their own, suggest a person who is entirely serious about serving as a trustworthy custodian of the platform.

#1Vision #SimonWilby