That’s why Musk’s acquisition is a stroke of luck

You have to give Elon Musk one thing: he’s always good for surprises. On Tuesday afternoon (local time) it became known that the Tesla CEO had suddenly decided to buy the short message service Twitter – for the originally agreed purchase price of $44 billion or $54 20 per share. After Musk spent six months trying to wriggle out of the takeover deal with allegations, insults and lawyers, it’s time to get back on track – business as usual.

Musk’s chances in the upcoming court case were slim

As is so often the case with him, one can only speculate as to why Musk decided to do something today that he legally defended himself against yesterday – but on closer inspection the decision makes sense.

The forthcoming court case may have played a decisive role: Musk would have had to make affidavits on Thursday, and in mid-October a court in Delaware would have decided in summary proceedings whether he was allowed to withdraw from his original purchase offer.

The chances of that happening were getting worse. The conditions of the takeover agreement were simply enormously advantageous for Twitter, because Musk had voluntarily waived a prospectus review (due diligence). Two commissioned data experts also refuted his argument that Twitter had been hiding, was full of fake accounts (bots), as the court documents now show. Musk stood naked like the Emperor in the well-known fairy tale.

A look at comparable takeover disputes, which the same court in Delaware had previously decided, also boded ill for him. Like a sinking ship with one escape route after another, Musk must have realized that there was no way out. And he probably wanted to spare himself the disgrace of being forced to take over by the court.

Economically, Musk is the best thing that could have happened to Twitter

As always with Musk, there remains a residual risk that he will revise his decision faster than this article can be tweeted.

But for now, champagne corks should pop on Twitter. Because Musk’s takeover is the best thing that could have happened to the platform from a business perspective.

Twitter may be a pillar of communication for journalists and politicians, especially in the US, but economically the platform is a bog. Even 16 years after its foundation, monetization is still sluggish, ideas for new sources of income such as the premium offer “Twitter Blue” flopped again and again.

The looming recession in the US is also currently crippling the digital advertising market, Twitter’s main source of revenue, and smart new competitors like Tiktok are vying for advertising dollars from Twitter there. Now the former head of security also drew attention to grievances in the company as a whistleblower. There is also a brain drain on Twitter – in September alone returned 700 employees or the equivalent of nine percent of the company’s global workforce. All of this was reflected in the collapsed share price.

Twitter also had no good alternatives other than a takeover by Musk.

One had to, even if he didn’t want to anymore – the others didn’t have to, but absolutely wanted to. Experts had therefore assumed that the two parties to the dispute would agree on a new, lower takeover price before or during the process. The fact that Musk is now surprisingly giving in to the originally agreed conditions was judged by experts on Tuesday to be highly unusual. For Twitter, it’s winning the lottery.

Musk apparently plans “X, the all-rounder app”

This was also reflected in the stock markets – the Twitter papers shot up by 22 percent on Tuesday until they were temporarily suspended from trading. For comparison, the shares of competitors Meta and Snap have halved in price in recent months.

In fact, everything could now happen quickly: Twitter’s shareholders have already approved a takeover by Musk, and the antitrust waiting period for the takeover has also passed.

One can only hope that the company can put the takeover drama behind it and move on to the next question: what exactly might the richest man in the world intend to do with the platform. In typical, cryptic Musk manner, he indicated this on Tuesday: For him, Twitter was a step in the direction of “X, the all-rounder app”. Perhaps this will be the breakthrough innovation that Twitter itself has been looking for for so long.

The NZZ correspondent Follow Marie-Astrid Langer.