Twitter's Lawsuit Against Elon Musk Looks Like a Loser

Twitter has sued Elon Musk, seeking to compel him to buy the company for $54.20 a share. Many observers think the company will prevail, or that Mr. Musk is likely at least to pay the $1 billion breakup fee. Theyre wrong. He is likely to walk away largely unscathed, a belief reflected in Twitters stock price. This case will be a good lesson on the limits of boilerplate merger agreements and the difference between a corporation and its shareholders.

The merger agreement in this case could be read in a way that permits a court to order Mr. Musk to buy Twitterhe and two entities he controls agreed they would not oppose such an orderthrough a remedy known as specific performance. Although litigation is always uncertain, it is hard to imagine a court would force the purchase of a $44 billion corporation.