Who won the Musk-Twitter fight? Lawyers

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

In a major reversal just days before he was scheduled to give a deposition, Elon Musk offered to complete his acquisition of Twitter under the original terms of the deal both sides agreed to back in May.

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

It wasn’t clear when, or if, Twitter would accept the offer. The case could still go to trial.

Twitter’s shares were halted twice on Tuesday, and jumped more than 20% when they resumed trading.

Let’s step back: Even for a deal that has been defined by unexpected twists and turns, Tuesday’s development is a doozy. A settlement before trial isn’t unusual, but a settlement for the exact same price is.

Should the deal move forward, it’d be a something of a pyrrhic victory for Twitter. The company will have succeeded in securing the best possible price for shareholders (good work if you can get it). But it would also be handing the car keys over to a mercurial billionaire who’s shown little understanding of how media companies work and whose history on the platform is that of an unfiltered troll.

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

The winners in all of this? The lawyers.

Twitter sued Musk in July to try force him to complete the deal, setting off months of legal back forth between some of the nation’s most powerful white-shoe law firms.

Twitter tapped Wachtell, Rosen, Lipton and Katz — an elite New York practice where partners earn about $8 million a year, according to Bloomberg. On Musk’s side is another Wall Street power firm, Skadden, Arps, Slate, Meagher & Flom.

The bill for both sides combined could easily reach the low- to mid- eight figures, said Peter Ladig, a Delaware lawyer with extensive experience in the court where the Musk-Twitter battle would take place. (“Eight figures” is just a mind-boggling way to phrase the concept of $10 million. Minimum.)

“It appears that Twitter is throwing everything they have at this in terms of bodies, and that adds up quickly,” Ladig told me. “You’re talking probably 20 lawyers at least, I would guess. The amount of data is massive.”

The timing of Musk’s latest pivot can’t be ignored. He was due to sit for a deposition starting Thursday, ahead of a trial scheduled for October 17.

“That is often the leverage point,” Ladig said. “When it comes down to the CEO… being deposed, lots of cases settle on the eve of that deposition.”

There’s a lot to unpack here, and my colleague Clare Duffy is all over it.

For reasons no one really seems to understand, stocks rose sharply again Tuesday.

The Dow has soared more than 1,500 points in the past two days, coming out of bear territory and rising up above the 30,000 milestone.

“It almost feels like a panic rally. The market mood got way too sour and people started to jump in,” said Callie Cox, US investment analyst with eToro. “But this rally feels random. It’s great to see stocks go up but these moves are a little disorienting.”

My colleague Paul R. La Monica has more.

If you’d made the past few days at Credit Suisse into a movie, you might have opened with scene-setting shots of stock and bond traders looking pained, hands in their heads, neckties askew. There’d be scenes of frantic bankers spending all weekend on the phone with clients, assuring them everything is fine. A CEO would slowly sip a glass of Scotch, reading over a memo assuring employees the leadership is doing everything it can to avoid layoffs…

As a connoisseur of the Wall Street-in-crisis genre, I would have been all in.

But it looks like the real-life drama at the Swiss bank may not yield the cinematic crash we’ve come to expect in the shadow of the 2008 financial crisis.

Here’s the thing: Speculation that Credit Suisse was about to collapse sparked a selloff on Monday, with the bank’s shares hitting a record low. It took no time at all for investors and commentators to start speculating about whether Credit Suisse was the new Lehman Brothers — the first big Wall Street domino to fall in the subprime mortgage crisis, almost exactly 14 years ago.

That fear is understandable. When faced with a complex, scary 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, the hand-wringing over Credit Suisse says more about the market’s ~mood~ right now than it does about the bank’s financial position.

Credit Suisse has been battered by years’ worth of scandals and fines. And there are still risks ahead. But it’s far from bankrupt. One analyst even described Credit Suisse’s liquidity position as “healthy.”

That’s partly why, by Tuesday, the panic was subsiding. Credit Suisse shares bounced back, along with the broader stock market.

“I do not think this is a ‘Lehman moment,’” said Mohamed El-Erian, an adviser to Allianz, on CNBC Monday.

BIG PICTURE

It’s not hard to see why investors would be triggered by Credit Suisse’s latest wobbling, triggered by a memo from the CEO that, rather than assuaging nerves, made people worry the bank was on even less solid footing than it seemed.

Combine that anxiety with the related anxiety of a looming global recession and chaos in UK bond markets and you’ve got yourself a big ol’ anxiety smoothie.

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

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

The silver lining: We didn’t emerge from 2008 without some guard rails. Large banks have much higher capital requirements to meet now than they did before the crisis, which should reduce the risk of contagion from any one failure.

Credit Suisse is far from insolvent, but even if things do go from bad to worse, it’d be unlikely to take the whole ship down with it.

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