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<ul class="summary-list"><li><keyword id="11892744" type="UNKNOWN" weightage="60" keywordseo="twitter" source="Orion">Twitter</keyword>'s court battle with <keyword id="11897862" type="UNKNOWN" weightage="60" keywordseo="elon-musk" source="Orion">Elon Musk</keyword> will leave neither group unscathed, experts say.</li><li>Wedbush analyst Daniel Ives said the deal has been "a black eye for Musk" and a "horror movie for Twitter."</li></ul><p>In the battle between Elon Musk and Twitter, there are lots of losers and no real winners, analysts say — except for the lawyers.</p><p>While Twitter is hoping for a swift resolution to the saga, experts told Insider the battle could drag out for months, or even a few years. In the meantime, it could hurt Musk's reputation, Twitter's business, and employees' morale. </p><p>"Overall, this has been a black eye for Musk and horror movie for Twitter — and its employees — with no winners since the soap opera began in April," Wedbush analyst Daniel Ives said in a note on Wednesday, a day after Twitter <a href="https://www.businessinsider.com/elon-musk-twitter-lawsuit-to-enforce-acquisition-takeover-deal-2022-7">fired back against Musk</a> in a lawsuit —  a response to <a href="https://www.businessinsider.com/read-elon-musk-letter-to-twitter-deal-is-off-2022-7">Musk's attempt to back out of his $44 billion deal</a> to buy the social company.</p><p><strong>Here's who could get hurt in the battle for Twitter's future — and who stands to benefit:</strong></p><h2>The losers</h2><h2><div type="image" title="elon musk" height="2249" width="3000" msid="92860746" hostid="261" sizebytes="205748"></div></h2><h3>Elon Musk</h3><p>Musk may be the richest person in the world, but attempting to back out of a deal isn't a good look.</p><p>"I think he's underestimating the reputational risk that could be incurred from this," John McClaine, a portfolio manager at Brandywine Global Investment Management, told Insider. "There's always a hit to you or your company's reputation when you walk away or try to walk away from a deal. Fast-forward a couple years and he's looking to acquire another business, there's going to be a lot of raised eyebrows."</p><p>Others point out that Musk's sharp-tongued tweets — ones that suggest that Twitter misled him when it comes to the number of fake profiles on the social service, for instance  — could hurt him in the long run. They might also incur more scrutiny from the Securities and Exchange Commission.</p><p>Musk already was in <a href="https://www.businessinsider.com/elon-musk-accuses-sec-of-endless-unfounded-investigations-into-tesla-2022-2">hot water</a> with the regulatory agency in the past, and he's <a href="https://www.businessinsider.com/sec-investigates-elon-musks-twitter-stake-disclosure-report-2022-5">already facing SEC scrutiny</a> over when he disclosed his majority stake in Twitter. </p><p>"Elon's not doing himself a favor by the constant tweeting," Derek Horstmeyer, a finance professor at the George Mason University School of Business, told Insider. "Those will definitely be presented in court — and maybe the judge will just say, 'This guy is not negotiating in good faith.' Anything that mocks the other side is just gonna make you look bad."</p><p>Musk has tweeted memes that suggest Twitter misled him on the number of fake accounts operating on the site, for example — something he's also alleged in his statement trying to back out of the deal. Twitter has said it provided Musk with all relevant information.</p><p>"The SEC doesn't get into contract disputes between companies," said Erik Gordon, a professor at the University of Michigan's Ross Business School. But, he added, "if Musk has manipulated the price of Twitter stock to his advantage, market manipulation could be a securities violation."</p><p>For instance, some analysts have said Musk could have been posting negative comments about Twitter to drive its stock price down — it's recently traded around $36 a share, vs. the $54.20 that he agreed to pay for the company. Some have said he might now try to push Twitter into accepting a lower price.</p><div type="image" title="Parag Agrawal and wife walk together at Sun Valley conference" height="1666" width="2222" msid="92860748" hostid="261" sizebytes="134226"></div><h3>Twitter</h3><p>In Twitter's case, while the company may have a strong legal argument, a protracted battle isn't in its best interest.</p><p>Twitter said in its lawsuit that compiling information for Musk's requests to count spam accounts took "weeks" and "considerable resources" that would have otherwise gone toward everyday operations. Twitter also said it's experienced "repeated disparagement" at the hands of Musk.</p><p>Since Musk agreed to buy the company, Twitter's stock has dropped about 40%. Experts told Insider that no matter the outcome of the court case, Twitter will face more lawsuits from shareholders in the coming months.</p><h3><div type="image" title="twitter" height="2176" width="3500" msid="92860750" hostid="261" sizebytes="153130"></div></h3><h3>Twitter employees</h3><p>And for Twitter employees, the entire saga is "devastating," Harry Kraemer, a professor of management and strategy at Northwestern University's Kellogg School of Management, told Insider. </p><p>"An organization is its people," Kraemer said. "Your people, instead of working, are spending most of their time trying to figure out, who owns the company? And what's going to happen to my job? What's going to happen to my family? How do you plan for what your new products or development is going to be over the next year when you don't know what's going happen next week? Planning kind of comes to a halt." </p><p>Twitter has <a href="https://www.businessinsider.com/twitter-mostly-freezes-hiring-loses-two-executives-2022-5">paused hiring</a> and <a href="https://www.businessinsider.com/twitter-layoffs-recruiting-team-elon-musk-takeover-spam-bot-2022-7">initiated layoffs</a> since Musk agreed to buy the company. In the lawsuit, the company attributes its actions to pressure from Musk to cut costs.</p><p>Twitter employees recently <a href="https://www.wired.com/story/as-elon-musk-walks-twitter-workers-say-no-ones-in-charge/">told Wired</a> that Musk's takeover and resultant termination of the purchase agreement have wreaked havoc on the company. <a href="https://www.businessinsider.com/twitter-takeover-by-elon-musk-may-mean-less-money-for-workers-who-quit-2022-5">Insider's Kali Hays previously reported</a> that several Twitter employees were considering jumping ship after Musk agreed to buy the social-media company.</p><h2>The winners</h2><h3><div type="image" title="Elon Musk, wearing a black suit and flanked by another man in a black suit and a police officer, walking in front of a gray metal barricade." height="1971" width="2628" msid="92860752" hostid="261" sizebytes="115414"></div></h3><h3>Lawyers</h3><p>While it's in Twitter's best interest to find a solution quickly, Kraemer said this battle could "easily" go on for at least a year. Gordon told Insider that if the judge does not rule in his favor, Musk could attempt to appeal the case and drag it on for as long as three years. </p><p>"The big, big winners in this one are gonna be the law firms," Kraemer said. "These guys are gonna make a fortune."</p><p>It is unknown how much attorneys for Twitter and Musk are charging. <keyword id="11930356" type="UNKNOWN" weightage="60" keywordseo="ma" source="Orion">M&amp;A</keyword> lawyers charged more than any other practice area in 2021, according to <a href="https://www.law360.com/pulse/articles/1505632/biglaw-s-m-a-boom-drove-hourly-rates-up-last-year">data collected by LexisNexis CounselLink</a>. The average partner rate in 2021 was $878 per hour, according to the report.</p>

In Elon Musk's court battle with Twitter, nearly everyone's a loser

<ul class="summary-list"><li><keyword id="11892744" type="UNKNOWN" weightage="60" keywordseo="twitter" source="Orion">Twitter</keyword> stock fell Monday after <keyword id="11897862" type="UNKNOWN" weightage="60" keywordseo="elon-musk" source="Orion">Elon Musk</keyword> said the company has breached their $44 billion merger deal. </li><li>Musk's lawyer in a letter told Twitter it has been "thwarting" requests for information about spam and fake accounts. </li></ul><p><a href="https://markets.businessinsider.com/stocks/twtr-stock">Twitter</a> shares dropped Monday after billionaire Elon Musk said the company has broken their pending $44 billion merger agreement by holding back information about fake accounts and spam on the social media platform. </p><p>The stock fell as much as 5.6% to $37.91 then pared the loss, finishing lower by 1.5%. </p><p>"Based on Twitter's behavior to date, and the company's latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company's corresponding obligations) under the merger agreement," Mike Ringler, Musk's attorney, wrote to Twitter's chief legal officer, Vijaya Gadde, in an <a href="https://www.sec.gov/Archives/edgar/data/0001418091/000110465922068347/tm2217761d1_ex99-o.htm">amended filing with the Securities and Exchange Commission</a>. </p><p>"This is a clear material breach of Twitter's obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement," Ringler wrote. </p><p>Musk has previously estimated the share of fake accounts on Twitter is about 25% of users, higher than the company's 5% estimate. </p><p>" Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," <a href="https://www.businessinsider.com/elon-musk-twitter-deal-actively-resisting-spam-bots-walk-away-2022-6">the company said in response</a>. </p><p>In May, Musk <a href="https://www.businessinsider.com/elon-musk-twitter-deal-frozen-ceo-shows-proof-of-spam-2022-5?inline-endstory-related-recommendations=">suggested cutting the $44 billion offer</a> for Twitter based on the number of bots on the platform. Musk and Twitter last month reached a deal for the world's richest man to pay $54.20 a share for the app. </p><p>Ringler told Gadde in the letter that Twitter has "refused" to provide Musk with the information he has repeatedly requested since May 9 to facilitate his evaluation of spam and fake accounts on the company's platform. </p><p>"Twitter's latest offer to simply provide additional details regarding the company's own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk's data requests," said Ringler. </p><p>Twitter on Friday said a mandatory federal 30-day waiting period for the deal has expired, putting Musk closer to buying the company in a deal that's still subject to approval by Twitter shareholders and other regulations.</p><p>Musk raised questions about his desire to complete the merger when last month he <a href="https://www.businessinsider.com/elon-musk-twitter-deal-temporarily-on-hold-2022-5?r=US&amp;IR=T">put the deal "on hold"</a> while he assessed how Twitter calculates its proportion of fake accounts.</p><p>"Mr. Musk has made it clear that he does not believe the company's lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so," wrote Ringler. </p><p>Twitter stock has lost 8.5% so far this year. </p>

Twitter falls after Elon Musk says the company has breached their merger agreement by 'actively resisting' requests for information about spam and fake accounts

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In Elon Musk's court battle with Twitter, nearly everyone's a loser

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Twitter falls after Elon Musk says the company has breached their merger agreement by 'actively resisting' requests for information about spam and fake accounts

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