What may happen if Twitter, Musk settle
In another well-known deal dispute not involving Twitter and Elon Musk, the Delaware Chancery Court ordered chemical maker Huntsman and Apollo Global to complete their deal.
Why it matters: Unlike Tyson and IBP, the two sides here actually went on to settle for a payout following the trial, instead of combining the two businesses.
Backstory: In 2007, Apollo-backed Hexion Specialty Chemicals agreed to acquire rival Huntsman for $6.5 billion.
- However, by mid-2008, Apollo asked a Delaware court to cancel the agreement, arguing "that a combined Hexion-Huntsman — a classic boom-era deal funded 100% with debt — would be insolvent and therefore couldn't meet banks' funding conditions," per the WSJ.
- A six-day trial ended in a victory for Huntsman, and the court told Apollo to do its best to close out the transaction.
- Ultimately, founder Jon Huntsman and then-Apollo boss Leon Black hammered out an alternative deal: Huntsman would receive $1 billion from a combination of sources (much more than the contract's $325 million breakup fee, but less than the original buyout amount).
- The weakening chemicals market and economic conditions drove Huntsman's decision to settle and move on, according to the WSJ.
Between the lines: "In general, lawyers talk all the time about seeking specific performance with the intention of getting bought out," UC Davis' Hunt explains.
So while it's impossible to know Twitter's strategy and intentions beyond what it says in its court filings, it could very well be open to a financial settlement with Elon Musk.
- A court victory could give it leverage to negotiate more than the $1 billion breakup fee in the contract.