With Musk’s Buy Of Twitter On The Fast Track, Where Does Twitter Go From Here?

With Elon Musk’s about face on Oct. 4 whereby he agreed to close on the deal to buy TwitterTWTR
after months of trying to get out of it, many are wondering what the driving force behind his decision was and where the company will go from here.

According to The New York TimesNYT
, Twitter executives still remains wary of Elon Musk and is considering getting a judge to oversee the deal’s closing via a consent decree, as well as asking the judge to order Elon Musk to pay interest on any extra time it takes to close the transaction.

Management at Twitter may be worried that one or more lender will back out of their commitment to financing the deal. In the October 4 13D filing with the S.E.C., Musk noted that he intended to close on the merger with its original terms on the following conditions:

· Pending receipt of the proceeds of the debt financing contemplated; and

· Provided that the Delaware Chancery Court enter an immediate stay of the action, Twitter vs. Musk, et al. (C.A. No. 202-0613-KSJM), and adjourn the trial and all other proceedings related thereto pending such closing or further order of the court.

If indeed the bank financing falls apart, Elon Musk will be on the hook for a $1 billion break-up fee. It’s also been reported that Musk wanted a quick close because of some very personal texts that he sent which were widely reported on after they were disclosed in a court filing which was released publicly.

The other issue which could have impacted Elon Musk’s decision to move on with the deal is legal fees. John Coffee, a Columbia law professor in August estimated that legal fees could have run as high as $1 billion.

Elon Musk is represented by Skadden, Arps, Slate, Meagher & Flom on the deal (and Quinn Emanuel Urquhart & Sullivan on litigation) where top partners bill $2,000 an hour. DealBook reports that lawyers they interviewed estimated that, in total, Elon Musk could be billed about $30K to $40K per day.

And that doesn’t count the bill that Twitter’s lawyers are running up, which Elon Musk likely would have had to pay if he lost the lawsuit. Twitter retained Wilson Sonsini Goodrich & Rosati and Simpson Thacher & Bartlett, where top partners also bill $2,000 an hour. Legal experts estimate that, to date, they may have run up legal fees between $150 and $300 million.

Elon Musk’s odds of winning the case seemed low so racking up so much in legal costs likely didn’t make sense. “Musk was going to lose the case,” Erik Gordon, a business law professor at University of Michigan, told Insider. “His lawyers knew that. Twitter’s lawyers knew that. His only hope was for Twitter to cave, and they didn’t.”

That said, the future of Twitter now looks uncertain as Elon Musk will likely replace much of the senior management team and could implement cost-cutting measures in order to shore up the bottom line, resulting in layoffs. The only clue coming from Musk is a tweet on October 4, “Buying Twitter is an accelerant to creating X, the everything app.”

He has previously talked about creating an X.com app that would compete with Twitter, so now maybe he will morph twitter into his vision of x.com. He tweeted on October 4 that buying Twitter could expedite the endeavor by three to five years.