Experts say that Musk’s misconduct claim won’t stop Twitter from doing business

Lipton stated that shareholders can decide to vote down the deal if they say, “I’d like my $54.20 but I don’t want to give over my baby to Elon Musk,” but this would be a significant change in investor behavior historically.

Acquisitions and mergers are almost always stalled by shareholders. A review of 1,620 deals from 1996 to 2017 revealed that shareholders rejected them in formal ballots only five times or 0.3 percent of the cases.

Twitter stock closed Friday at $38.29 per share, an increase of 2.7 percent. The S&P 500 was flat.

Lipton also agreed that it was unlikely for the Twitter board to pull out of the deal. According to Delaware state law, Twitter is incorporated in Delaware, the board is required to maximize shareholder wealth. If it does not consider Musk’s price, it could be sued by shareholders.

Twitter didn’t immediately respond to a request to comment.

In some cases, allegations of misconduct by executives led to a contract being canceled.

After Tyco International executives were accused of using $170m in company money for parties and to buy high-end items, including a $6,000 Shower Curtain, Tyco sought to acquire two other companies. Morgan Ricks, a Vanderbilt University law professor who studies mergers, stated that Tyco wanted to acquire two other companies.

However, there was a significant difference between the Twitter deal and the Tyco deal. Tyco bought the target companies with shares in Tyco stock instead of cash, and these shares became toxic after the scandal broke.

Ricks stated that the target companies no longer wanted the stock. Twitter shareholders now get the same cash, however. He said, “$54.20 equals $54.20.”

Another case is that Microsoft started exploring the possibility of buying Activision Blizzard, a game publisher, last year after negative media coverage about Activision’s CEO lowered the share price. This made it a more affordable deal.

Experts believe that Musk’s co-investors and lenders will not back off the deal. This is because, unless there are further allegations or reports about payouts, the report won’t be considered in their assessment of Musk’s ability to turn a profit at Twitter.

Lipton said, “It’s certainly not like we don’t know the dude’s history,” citing sexual harassment allegations at SpaceX, and Tesla (two companies where Musk is CEO). Musk is not being accused by the flight attendant.

Lipton stated that he can see a world in which equity investors and lenders would be reluctant to lend money to someone who has been accused of sexual harassment. But, this is clearly not the case. “I don’t know if this additional allegation will be the straw that Morgan Stanley claims, ‘Oh no, we’ve been wrong all along.’

The deal will see Morgan Stanley lend $2 billion, which is more than any other bank. This was reported by the Financial Times this month. Friday’s request for comment was not answered by the bank.

Both investors and users have been on a rollercoaster ride with the Twitter deal. Musk’s deal was less attractive financially due to the decline in the stock market. Musk has now claimed that the deal is temporarily suspended, and has complained about Twitter’s handling spam bots. Twitter executives however have stated that it is not suspended.

Ricks stated that “Banks backing out would likely be what Musk wants — but what Twitter doesn’t want — at these valuations.”