A Twitter trial would expose Elon Musk to scrutiny. Buying Twitter might help him avoid it.

Elon Musk wanted to buy Twitter. Then he didn’t. Now, according to a letter he sent to Twitter earlier this week, he does. Yes, again.

The news in this months-long saga came the very week he was expected to be deposed in in a lawsuit Twitter filed against Musk for breach of contract. The exact reasons for his 180 are unknown, but experts told Vox that it shows the Delaware Court of Chancery’s muscle in potentially reining in the richest person in the world’s disregard for convention in his business dealings.

After Bloomberg first reported on Musk’s renewed offer to Twitter, an SEC filing revealed that Musk sent Twitter a letter on Monday night saying he wants to buy the company at the price he originally offered: $54.20 per share, amounting to a deal worth around $44 billion. That’s higher than Twitter’s Wednesday stock price.

Twitter hasn’t yet responded to Musk’s proposal, and Musk very well could change his mind again. In the meantime, Musk’s deposition, scheduled to begin October 6, has been postponed by Musk and Twitter as they continue discussions, according to Reuters.

Those closely watching the case say the billionaire’s sudden, unexpected willingness to close a deal that he previously soured on could represent a meaningful break in the Elon Musk narrative — that, at a moment when everyone is watching, he might not get his way. Perhaps that’s why his offer contains one important stipulation: The letter notes that Musk will close the deal “provided that the Delaware Chancery Court enter an immediate stay of the action” and “adjourn the trial.”

Musk has gotten into legal trouble before, but he has a track record of coming away from it with victories or minor fines — and hardly a ding to his public image. A Twitter trial, should it continue, could be a watershed moment for how the public sees Musk: no longer as the genius, environment-loving tech innovator, but increasingly as a rich man who breaks promises when it benefits him.

Through the ups and downs of the Twitter deal, Musk has faced the court of public opinion, and he’s not coming away unscathed. According to a Morning Consult poll from June, US voters have a less favorable impression of him than they did in April, with unfavorability among Democrats jumping to 59 percent. Musk may avoid more reputational damage if the lawsuit ends quickly, because this trial would mark the most high-profile attempt at holding him accountable in the public eye.

As explained by the Chancery Daily, which has been providing real-time updates and context on the lawsuit through its Twitter account, “The letter doesn’t say much, it doesn’t do much, but it does mean something. It means that Elon’s mindset has changed.”

Musk may not be above the rules after all

Even if those watching the case take everything Musk does or says with a grain of salt, the letter he sent to Twitter could still be read as a rare public capitulation from a powerful man with a track record of mostly getting his way.

Take his multiple run-ins with the SEC. Musk first locked horns with the agency a few years ago when it sued him for making false and misleading tweets about having secured funding to take Tesla private, making share prices jump. Musk is Tesla’s largest individual shareholder. He and Tesla each paid a $20 million fine — still pretty tame for a billionaire — and Musk agreed to have tweets regarding his companies reviewed internally, a leash Musk chafes at and continues to fight. He has continued to tweet about other stocks, like Gamestop and Dogecoin, moving markets. The SEC is also currently investigating Musk for the late disclosure of the Twitter shares he began buying early this year, a move that may have saved him over $143 million.

There is “definitely some frustration within the four walls at the SEC with trying to get Musk to follow the rules,” according to Josh White, a professor of finance at Vanderbilt University who was formerly an economist at the agency. The SEC has sometimes been accused of being toothless, though it has recently been ramping up enforcement, including levying a $1.26 million fine on Kim Kardashian for failing to properly disclose a crypto-touting ad.

Musk also flouted public health orders by reopening his Tesla factory in May 2020, before officials deemed it safe to do so. He didn’t face any consequences; in fact, county officials signed off on the move a few days later.

Musk has been involved in other public skirmishes before. In 2018, Musk infamously called a British cave diver involved in the rescue of a Thai youth soccer team a “pedo guy” on Twitter. The diver lost his defamation suit against Musk.

Earlier this year, the Delaware Court of Chancery also ruled in favor of Musk in a lawsuit where Tesla directors accused the CEO of pressuring them to buy SolarCity, a solar energy company Musk helped found, at an inflated price. The plaintiffs are currently appealing that ruling in the Delaware Supreme Court.

The odds against Musk

The Twitter saga is only the latest controversy in which Musk has found himself. Twitter sued Musk in July, asking the court to force him to follow through with a $44 billion acquisition offer he made the company in April and rescinded months later.

Since then, there’s been a flurry of speculation around whether the social media platform could really win against the billionaire. Legal experts have said Twitter had a stronger case, but what would happen if Musk simply didn’t comply with a court order? The Tesla and SpaceX CEO has a history of publicly undermining regulators and authorities, most notably the Securities and Exchange Commission. In an interview the day after he offered to buy Twitter, he called SEC regulators “bastards.”

According to Ann Lipton, a law professor at Tulane University and former corporate litigator, Musk’s case was always weak. (Musk refused to follow through on the purchase of the social media platform on the premise that it had misled him about the number of spam bots. Twitter has said he reneged because of a market downturn that affected both Twitter and Tesla stock prices.)

“Every day that passes in this court, it’s been clear that [Musk’s case] is weaker. He’s lost a lot of rulings with the chancellor,” she told Vox.

The Delaware Court of Chancery has a history of efficiently ruling on corporate disputes; many businesses, including Twitter, incorporate in Delaware because of its famously pro-business laws. Kathaleen St. Jude McCormick, the court’s chancellor, has denied most of Musk’s broad requests for Twitter data so far. In September, Musk’s lawyer also argued that the trial should be delayed till November. That request was denied, too. Then, hundreds of Musk’s personal text messages were released in court documents made public last week.

It’s possible that Musk’s text messages played some role in his decision to revive his offer to buy Twitter. The texts revealed the ease with which Musk and other wealthy investors — including Oracle co-founder Larry Ellison, who committed $1 billion to the deal — chatted about coming up with the billions of dollars required for the purchase. In the texts, some of the nation’s wealthiest and most influential people showed excitement at the idea of Musk leading Twitter and turning it into the ultimate platform for uncensored speech.

“Especially after the text messages came to light, it was sort of embarrassing for everyone,” Lipton told Vox. “If he was afraid that those investors would get cold feet, that would mean that he could end up buying the company, but with less investor support.”

Initially, Musk outwardly behaved as if he was one step ahead of Twitter, even tweeting a meme implying that the lawsuit would backfire and force Twitter to reveal the truth about its bot problem in court. Proof that Twitter lied about the degree of its bot problem hasn’t surfaced. On the other hand, Musk’s text messages indicate that in April, before he agreed to buy Twitter, he was already aware of the issue of fake accounts. That public revelation deflates his argument that he was misled about Twitter’s bots before agreeing to acquire the platform.

With his latest offer, Musk isn’t trying to negotiate a lower price — an option he’s previously hinted at wanting. Instead, it could be an indication that he is aware of where things stand: His case is weaker than Twitter’s, and Twitter is unlikely to settle at a lower price.

There’s also Twitter’s value to think about. If Musk began to think the court would force him to be the site’s new owner, Lipton said, dragging the case out could further hurt the price. When Twitter accepted Musk’s offer on April 25, its price was about $51 per share. It fell by 11 percent on the day Musk announced he was pulling out. Yesterday morning, before it was revealed that Musk wanted to buy again, it was trading around $42.70.

“He’d end up with a weaker company than he had before,” Lipton said.

So if Musk believes he doesn’t have a good chance of winning, agreeing to buy Twitter for $44 billion before any more damage is done to the company might just be the best deal he can get.

The winners and losers, if Musk buys Twitter

If Musk ends up buying Twitter, its shareholders will win big, according to White. (Twitter is currently a publicly traded company; Musk wants to take it private. If Twitter agrees to his proposal, it will also resurface many of the questions about what else he will do with the social media platform.)

White says that Musk would be overpaying for Twitter; he estimates that, based on current market conditions, if the deal fell through, the company’s stock would be trading between $10 and $20 per share rather than above $50.

It would likely be a very different story for Twitter users and employees. The global sentiment around Musk buying Twitter has been mostly negative, according to a study by Tufts University analyzing sentiments expressed by Twitter users regarding the acquisition. In the US, according to the study, there was a big spike in sadness and anger when Twitter accepted Musk’s bid on April 25. When Musk claimed the deal was on hold in mid-May, there was a rise in angry tweets. Progressives are also already worried about the possibility of a Musk-led Twitter allowing former President Donald Trump back on the platform after he was suspended in January 2021.

Given the high price Musk is paying for Twitter, he will likely want to quickly earn a return on his investment, White continued. The text messages released last Thursday showed Musk telling Twitter board chair Bret Taylor that his “biggest concern was headcount and expense growth.” In a June meeting with Twitter employees, Musk didn’t deny the possibility of layoffs once he took the reins.

Tesla shareholders probably aren’t thrilled either. Tesla’s stock price fell after Musk’s intention to buy Twitter after all became public. White said he believes that it declined in part due to uncertainty over how much more stock Musk might have to sell to come up with $44 billion. In August, he sold almost $7 billion worth of his Tesla shares.

Shareholders might also fear Musk’s ability to lead yet another company on top of Tesla, SpaceX, Neuralink, and the Boring Company. “Every day or every hour he spends working on Twitter — which he will have to, it’s a huge investment for him — that’s one less hour he would spend on Tesla,” White said.

Musk’s unpredictable style and tendency to weigh in on the issues of the day in an inflammatory manner — such as the Ukraine-Russia war — can also create fallout for the businesses he runs. In June, SpaceX employees wrote a letter to company executives voicing their concerns about how their CEO’s public behavior reflected on them. Several employees involved in writing the letter were fired.

What happens next

As of now, the trial is still on. Musk has signaled that he’s back on board to buy, but that doesn’t mean Twitter will respond speedily. The platform has the upper hand for now and little incentive to rush. The board is currently considering Musk’s offer, and there are details to work out even if Twitter wants to be bought, given how tumultuous the acquisition has been.

“Twitter’s going to want some kind of hard commitment from him that will prevent him from backing out — maybe a court order of some kind,” said Lipton. If Twitter feels protected from getting burned by Musk again, they might come to an agreement, and then the lawsuit can end. It’s not clear how long that might take.

There might also be important details that the public has no idea about. “We don’t see everything,” said Donna Hitscherich, a professor of finance at Columbia Business School. “It ain’t over till it’s over. I think that’s the tagline for this whole thing. [Mergers and acquisitions] deals are complicated under the best of circumstances, and this one added some twists and turns.”

Whatever the outcome, in the face of his history of avoiding accountability, the possibility of Musk facing consequences this time is meaningful. If he ends up buying Twitter, that would be a win for the courts and the rule of law, White said.

“As a society, we often view wealth as maybe being above the law,” he noted. Musk might have the resources to hire the best lawyers in the field, but the Court of Chancery’s powers are nothing to scoff at. It can seize some of Musk’s assets — such as his Tesla shares — if he doesn’t comply with a court order.

“I think this is him conceding defeat,” Lipton said. “And I think he’s doing it in recognition that the law was just not going to go his way.”

Update, October 6, 10:30 am: This story was originally published on October 5 and has been updated to indicate that Musk’s deposition in Twitter’s case against him has been delayed.