What do you have to fear when you are the richest man in the world? Usually not much. But Elon Musk loves media attention too much not to constantly try to get noticed, even if it means getting himself in trouble.
His latest stunt: announcing with fanfare his wish to buy Twitter, before finally retracting despite a procedure already initiated. Only, Twitter does not intend to let him get away with it, and it could cost him dearly. Quartz asked several experts what the CEO has most to fear.
At the top of the list is Kathaleen McCormick, the Chancellor of the Delaware Court of Chancery, where Twitter sued the billionaire.
This 230-year-old court is an “equity court” which can provide solutions to the conflicts it must arbitrate that are not strictly provided for by law. Rather than a simple fine, it could force Musk to complete the $44 billion deal he committed to.
The judges of this court, and therefore Kathaleen McCormick, have a reputation for being competent, experienced and very efficient. “I don’t think she will be fazed by any attempts to distract or confuse the matter which at this time, with no new information added, appears to be the only hopes for Musk”says Ann Lipton, a specialist in business law at Tulane University.
cloud of worries
The second threat is the financial policeman of the United States, with whom Musk has already crossed swords. Elon and his brother Kimball are suspected of insider trading after selling the equivalent of 108 million dollars (105.7 million euros) in Tesla shares just before announcing the planned takeover of the social network. This announcement caused Tesla’s share price to plummet.
Finally, the third threat comes from Tesla shareholders. “If the court forces him to buy Twitter, it’s a safe bet that Musk will use his Tesla shares as collateral for a portion of the acquisition price”explains to Quartz an expert in corporate law.
This is precisely what the billionaire did by selling $ 6.9 billion of shares in the manufacturer between August 5 and 9, in anticipation of a possible forced transaction and to avoid a transaction in the emergency .
In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.
— Elon Musk (@elonmusk) August 10, 2022
This type of sale, despite public promises in the spring that Musk would not shed any more Tesla shares in the immediate future, could displease some of the firm’s shareholders, who do not want the CEO to be busy elsewhere, or that the value of their shares be linked to fate of the social network.
If these frenzied investors were to drive Tesla’s share price down any further, Musk would find himself in bad shape – all things considered, of course. Because as Jennifer Grygiel, a specialist in finance and social networks, points out, “at worst, it drops a few places in the Forbes list […] and inherits a powerful platform[…] It’s always a win-win when you’re this rich.”