Who won the Musk-Twitter battle? the lawyers

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Well, well, well. Look who’s asking to buy Twitter for the same price they agreed to pay for it four months ago…

In a major presentation just days before he was scheduled to give a statement, Elon Musk offered to acquire Twitter under the original terms of the deal the two sides agreed to in May.

A Twitter spokesperson said in a statement to CNN that the company had received Musk’s offer and reiterated its intention to close the deal at the original price of $54.20 per share, or $44 billion.

It was unclear when or if Twitter would accept the offer. The case may still go to trial.

Shares of Twitter were halted twice on Tuesday, jumping more than 20% in early trading.

Let’s backtrack: Even for a deal defined by unexpected twists and turns, Tuesday’s development is a doozy. Settlement before trial is not uncommon, but equal price settlement is.

If the deal goes through, it would be a pyrrhic victory for Twitter. The company will get the best possible price for the shareholders (if you can get a good job). But it would also be to hand over how media companies operate and the history of the platform to a mercurial billionaire who belongs to an unfiltered troll.

Musk would be the clear loser here, having to use billions of his wealth to finance a deal for a company he no longer wants.

The winners in all this? The lawyers

Twitter sued in July to try to force Musk to complete the deal, prompting a months-long legal backlog between the nation’s most powerful white-shoe law firms.

Twitter tapped Wachtell, Rosen, Lipton & Katz — an elite New York practice where partners earn about $8 million a year, according to Bloomberg. Across from Musk is another Wall Street powerhouse, Skadden, Arps, Slate, Meagher & Flom.

Both sides’ bills could easily reach the low and mid-eight figures, said Delaware attorney Peter Ladig, a Delaware attorney with extensive experience in court where the Musk-Twitter battle would take place. (“Eight figures” is just a fancy way of expressing the $10 million concept. Minimum.)

“Twitter seems to be throwing everything they have in terms of bodies, and it adds up quickly,” Ladig told me. “You’re probably talking about at least 20 lawyers, I think. The amount of data is enormous.”

The timing of Musk’s latest pivot cannot be ignored. He was scheduled to appear Thursday before a trial scheduled for October 17.

“That’s usually the leverage point,” Ladig said. “when it comes to the CEO…removal, many cases are settled on the eve of that declaration.”

There’s a lot to unpack here, and colleague Clare Duffy has been around for a while.

For reasons no one really understands, stocks rose sharply again on Tuesday.

The Dow has gained more than 1,500 points in the past two days, breaking out of bear territory and rising above the 30,000 mark.

“It almost feels like a panic rally. The market mood got really sour and people started jumping in,” said Callie Cox, US investment analyst at eToro. “But this rally is random. It’s nice to see stocks going up, but these moves are a little disorienting.”

My colleague Paul R. La Monica has more.

If he made his last days at Credit Suisse into a movie, it might open with scenes of stock and bond traders, hurt, hands on heads and neckties askew. There would be scenes of frantic bankers spending the entire weekend on the phone with their clients, making sure everything is fine. A CEO slowly sipped a glass of Scotch as he read a note to employees telling them that management was doing everything it could to avoid layoffs…

As a connoisseur of the genre in crisis on Wall Street, I’d be all for it.

But it seems that the real-life drama of the Swiss bank may not deliver the cinematic crash we expect in the shadow of the 2008 financial crisis.

Here’s the thing: Speculation that Credit Suisse was about to collapse sparked a sell-off on Monday, sending the bank’s shares to a record low. It didn’t take long for investors and commentators to start speculating whether Credit Suisse was the new Lehman Brothers—the first great Wall Street domino to fall in the subprime mortgage crisis, almost exactly 14 years ago.

That fear is understandable. Faced with a complex and daunting problem, we tend to look to the past for solutions, hoping we can see now what we couldn’t see then.

But, as my colleague Julia Horowitz writes, Credit Suisse’s intervention says more about the mood of the market right now than it does about the bank’s financial health.

Credit Suisse has been plagued by scandals and fines for years. And there are still dangers ahead. But it is far from failure. One analyst also described Credit Suisse’s liquidity position as “healthy.”

Partly because of this, on Tuesday, the panic was subsiding. Credit Suisse shares retreated, along with the broader stock market.

“I don’t think it’s a ‘Lehman moment,'” Allianz adviser Mohamed El-Erian told CNBC on Monday.

THE BIG PICTURE

It’s not hard to see why investors would be rattled by Credit Suisse’s latest shake-up, triggered by a CEO memo that, instead of calming nerves, left people worried that the bank was even stronger than it appeared.

Combine that anxiety with related anxiety You’ve got a big stir-fry of global recession and chaos in the UK bond markets.

Everyone on Wall Street wants to anticipate the next big risk, remembering that it doesn’t always come from where you’d expect. (Few saw the dangers of the subprime mortgage trade that heralded the housing market implosion in 2008, for example).

The devil is always in what you don’t know, and Credit Suisse, as we know, is exposed to risks that the market doesn’t know about, according to José-Luis Peydró, professor of finance at Imperial College Business. School.

The silver lining: We haven’t gone without a few guard barrels since 2008. Big banks now have much higher capital requirements to meet than before the crisis, which should reduce the risk of contagion from any failure.

Credit Suisse is not far from insolvent, but even if things go from bad to worse, it is unlikely to bring the whole ship down with it.

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