Notice of termination of Twitter merger agreement

https://www.sec.gov/Archives/edgar/data/1418091/000110465922078413/tm2220599d1_ex99-p.htm

by coloneltcb • 4 years ago

1324 1408 4 years ago

legitster2• 4 years ago

Oh boy. The real circus is about to begin. Everything before this was just a warm up.

x86x873• 4 years ago

Nowadays when everything is just circus is hard to say when things start and when they end. One thing is clear to me - Elon didn't learn anything from his previous episodes ("funding secure", calling people names, crypto scams, etc).

minimaxir5• 4 years ago

Elon waived his right to due diligence when he first made the offer to buy Twitter, so backing out of the deal by arguing a lack of due diligence is very funny.

tazjin• 4 years ago

They write

Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.

Is the merger agreement public?

jcranmer2• 4 years ago

First result on Google cropped up this:

https://www.sec.gov/Archives/edgar/data/1418091/000119312522...

tptacek12• 4 years ago

This argument is a sleight of hand. Nobody has claimed that Musk waived his right to information from Twitter. What he waived was his right to diligence, which is the right to information along with the discretionary right to terminate the deal based on it. What he waived was the ability to do anything with the information absent an (impossible to obtain) MAE discovery.

The obvious legalese thing to do in Musk's buyers-remorse situation is to use the information rights to make demands so unreasonable no acquiree can reasonably honor them, which is exactly what he seems to have done here.

riazrizvi• 4 years ago

He was specifically looking for

1. Information related to Twitter’s process for auditing the inclusion of spam and fake accounts in mDAU.
2. Information related to Twitter’s process for identifying and suspending spam and fake accounts.

His principle activity is influencing. The main sticking point of the proposed merger is information on how Twitter polices fake accounts. Nothing suspicious about this at all. Reminds me of the time a wolf was interested in buying my farm, and mainly wanted to know when my dog was chained up and how long the chain was exactly.

JamesSwift7• 4 years ago

Yes its public, just as this letter is. Notice that they dont refer to any specific section of the agreement in this portion of the statement, unlike the other references they make to the agreement.

JumpCrisscross5• 4 years ago

Is the merger agreement public?

Yes [1].

[1] https://www.sec.gov/Archives/edgar/data/0001418091/000119312...

that_guy_iain5• 4 years ago

They’re not claiming a lack of sue diligence, they’re claiming fraud. Which is different. They’re saying they’re lying about the numbers. Which would be fraud.

zimpenfish2• 4 years ago

They’re saying they’re lying about the numbers. Which would be fraud.

But they've been sending the SEC these same numbers calculated using the same methodology since 2013, right? If they were materially adverse circumstances, you'd imagine that someone would have caught this in the last 9 years...

timmytokyo• 4 years ago

They'd have to prove it in court. Good luck with that.

xadhominemx• 4 years ago

Fraud is not enough. It has to be fraud bad enough to cause a materially adverse effect, which means it would have to seriously impair the value of the business.

dragonwriter11• 4 years ago

There aren't claiming fraud, there are claiming breach of contract. Including, among other things, by failing to maintain operations in the regular course of business because of, I kid you not, allowing some senior officials to resign.

(It's true some of the many other things that are claimed to be breaches relate to alleged failure to fulfill obligations to provide information that Musk supposedly wanted to determine if other claims that has been made were fraudulent, but that's different than alleging fraud.)

delaaxe• 4 years ago

They who and they who?

WhyNotHugo• 4 years ago

If he's claiming fraud, doesn't he have to prove it?

dkjaudyeqooe2• 4 years ago

Which is nonsense, since the numbers in question are not verifiable.

How can you identify a "spam account"? It's not possible to definitively determine the intent of someone opening or using a new account.

So the numbers are arguable either way. Musk is using this fact to try to wriggle out of a disastrous impulse buy.

throwaway298123• 4 years ago

Of which they have 0 proof of. In fact, Twitter gave them the access they asked for last month.

Covzire2• 4 years ago

Musk himself has addressed this, saying that the waiver is null and void if the data supplied to the SEC by Twitter is fraudulent. I can only assume he believes that is the case.

>First, although Twitter has consistently represented in securities filings that “fewer than 5%” of its mDAU are false or spam accounts, based on the information provided by Twitter to date, it appears that Twitter is dramatically understating the proportion of spam and false accounts represented in its mDAU count. Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%.

camjohnson2613• 4 years ago

Musk has released nothing that would indicate that the numbers are fraudulent.

tsimionescu9• 4 years ago

the waiver is null and void if the data supplied to the SEC by Twitter is fraudulent.

Look at said SEC filing. It is worded in a way that is impossible to prove fraudulent with the kind of data Musk asked for. He could have proof positive that he is the only human account on Twitter and the Twitter SEC filing would likely not be construed as lying - it very explicitly states that it is a judgment call by the Twitter execs, based on some internal methodology, and that the real number could be higher.

The only way you could prove they lied to the SEC would be if you found emails that say something along the lines of "to the best of our knowledge, 20% of mDAUs are actually bots/spammers, but let's say 5% in our SEC filing".

bryananderson2• 4 years ago

As Matt Levine explained [0] the “waiving due diligence” doesn’t really mean anything now. What does mean something is that he signed a binding agreement to buy Twitter, giving Twitter the right to compel him to close the deal, and there’s no “too many bots” exception, nor a “you were wrong (or even lied) about something you said” exception. He has to prove that it’s a “material adverse effect” which I understand is nearly impossible (he’d have to convince a Delaware judge that the company is worth at least 40% less than stated because of this, and in practice it seems these suits almost never succeed).

[0] https://twitter.com/matt_levine/status/1545151445057536001

dylan60410• 4 years ago

I absolutely love that fact that this tweet happy individual might actually get slapped for just tossing out tweets. Not sure if $1B would make him squirm or not, but even for billionaires, $1B is an expensive twitter rant.

somenewaccount14• 4 years ago

idk. the fact that the price had already sunk nearly 40% from his price over this period could clearly indicate that his assumption isn't without merit.

camjohnson2613• 4 years ago

Matt Levine has a take down of the supposed bot problem. Basically Elon not only waved due diligence, he signed a binding agreement to buy Twitter, and the bot talk is irrelevant. Even if there’s a problem, Musk should have addressed it before signing an agreement to buy the company.

https://twitter.com/matt_levine/status/1545151445057536001?s...

wollsmoth• 4 years ago

Can twitter agree to release him from the agreement? For a fee? I know he has a $1B penalty but I didn't think that covered this current situation. Perhaps Twitter would be willing to forget the whole thing for $1.5B

collegeburner• 4 years ago

Tbh i haven't read the agreement and i'm not going to but representations and warranties is generally grounds to terminate.

sureglymop• 4 years ago

Read this a few weeks ago when the newsletter arrived. Money Stuff by Matt Levine is very worth subscribing to!

dragonwriter11• 4 years ago

The letter doesn't cite the bot problem directly, but instead Twitter allegedly failing to live up to it's obligation to give Musk info, which he wanted regarding the bot problem. (And a bunch of other alleged breaches.)

inerte3• 4 years ago

Reading Matt I realized there's another layer, which is Musk has complained about the bot problem for a while - heck, one could argue that he bought Twitter not only fully knowing (according to him) it has a bot problem, but he intended to _fix_ the problem.

tick_tock_tick6• 4 years ago

The agreement have a massive out; yes it doesn't matter what Elon thinks about the bots but if his financier think bots are an issue he gets an out since Twitter for some reason let a financing clause in.

smcl• 4 years ago

The due-diligence-waive thing isn't really relevant according to Matt Levine, who has been pretty consistent about this for months (see the thread @ https://twitter.com/matt_levine/status/1545151445057536001). A couple of choice tweets here:

""" the reason that elon musk can't get out of the deal over the bots thing is not that he "waived due diligence." it's that he SIGNED A BINDING AGREEMENT TO BUY TWITTER, and that agreement does not have any outs for "i think there are too many bots. """

... and ...

""" yes i know that this is a small petty thing. but part of my point is that even if he had demanded extensive due diligence, and done it, and then signed the agreement, we'd be in the same place. the waiver or not of due diligence doesn't matter; what matters is we're past that. """

deelowe3• 4 years ago

DD would matter in the context that Musk was acting on bad information. But there was no DD AND he wasn't acting on bad information, so it's all moot.

mzs3• 4 years ago

i know i am screaming into a well here but a very bad thing is people going around saying that elon musk "waived due diligence" and so can't bring up the bots thing.

…

the reason that elon musk can't get out of the deal over the bots thing is not that he "waived due diligence." it's that he SIGNED A BINDING AGREEMENT TO BUY TWITTER, and that agreement does not have any outs for "i think there are too many bots."

- Matt Levine esq of Bloomberg

https://twitter.com/matt_levine/status/1545152302142689281

nonameking20263• 4 years ago

I don't know how the legal system works, but his argument sounds valid to me.

“My offer was based on Twitter's SEC filings being accurate,”

Willfully filing fraudulent SEC filing is a crime - and if Twitter has been engaging in criminal behavior to artificially increase their value - I would think Musk has a good case.

CogitoCogito19• 4 years ago

Willfully filing fraudulent SEC filing is a crime - and if Twitter has been engaging in criminal behavior to artificially increase their value - I would think Musk has a good case.

Ignoring whether this is a legitimate reason to back out of the agreement, Musk hasn't shown that Twitter has been filing fraudulent SEC filings so what does it matter anyway?

pclmulqdq9• 4 years ago

I'm ready for the fireworks. Odds are he will be forced to go through with it, but he will negotiate a lower price.

Edit: This is over the mDAU thing still? It's been explained to him very slowly that all the bots that post tweets all day are often not seeing ads, right? That the "monetizable" is a key part of that phrase?

zimpenfish2• 4 years ago

but he will negotiate a lower price

How? As best I understand things, he has zero wiggle room - he either buys Twitter for the agreed price or he stumps up the $1B termination fee.

And if Twitter's board did go mad and decide to negotiate a lower price, their shareholders would almost certainly block it and/or sue the board, no?

streetcat1• 4 years ago

I do not think that he can pay the termination fee. I.e. the termination fee itself has rules. Otherwise, he would have payed it (the fee is equal to the daily move of his TESLA shares).

cbtacy• 4 years ago

Pretty much. I think it's more likely he's trying to set things up to make the claim that Twitter wasn't co-operative and forthcoming with the information and then try to reduce the break fee in court.

adgjlsfhk13• 4 years ago

A 1B termination fee is relatively small given that Twitter's market cap is down 10B since the beginning of April.

Johnny5552• 4 years ago

he stumps up the $1B termination fee

I don't think that's even an option -- that $1B breakup fee was just if the deal was not allowed to go through due to reasons outside of his control (like if it was blocked due to regulatory reasons). Otherwise, I think he's legally obligated to go through with it -- and Twitter's board has fiduciary responsibility to hold him to it.

ozim• 4 years ago

No because he bid above twitter current stock valuation so he can still go down and people might not be happy but they will not be able to sue anyone.

tick_tock_tick6• 4 years ago

He has tons of wiggle room. Mostly in this will takes years to resolve, Twitter will be forced to disclose nearly every internal document that will 100% have some email or chat of employees stating, if only as hyperbole, that the bot rate they report to the public is bullshit.

minimaxir5• 4 years ago

His team apparently had a tough time verifying the data due to API rate limits.

While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors. For example, when Twitter finally provided access to the eight developer “APIs” first explicitly requested by Mr. Musk in the May 25 Letter, those APIs contained a rate limit lower than what Twitter provides to its largest enterprise customers. Twitter only offered to provide Mr. Musk with the same level of access as some of its customers after we explained that throttling the rate limit prevented Mr. Musk and his advisors from performing the analysis that he wished to conduct in any reasonable period of time.
Additionally, those APIs contained an artificial “cap” on the number of queries that Mr. Musk and his team can run regardless of the rate limit—an issue that initially prevented Mr. Musk and his advisors from completing an analysis of the data in any reasonable period of time. Mr. Musk raised this issue as soon as he became aware of it, in the first paragraph of the June 29 Letter: “we have just been informed by our data experts that Twitter has placed an artificial cap on the number of searches our experts can perform with this data, which is now preventing Mr. Musk and his team from doing their analysis.” That cap was not removed until July 6, after Mr. Musk demanded its removal for a second time.

outside1234• 4 years ago

They had firehose access - there was no limiting

ben_jones2• 4 years ago

A lot of these rate limits would have been designed off the rubble of the Cambridge Analytica scandals, and would've been designed to prevent a lot of analysis.

I still find it dubious that they couldn't long poll sufficient samples. I'd love to see the raw feedback of Musk's "Data Experts" versus whatever awful telephone game it became through several layers of Executives and Lawyers. I wonder if Musk just has a nepotistic data team next to him.

fooey• 4 years ago

the contract says they can't make any demands that have materially adverse effect on the company

if he was hitting up against rate limits, it's easy for Twitter to call his requests adverse

whimsicalism2• 4 years ago

when Twitter finally provided access to the eight developer “APIs” first explicitly requested by Mr. Musk in the May 25 Letter, those APIs contained a rate limit lower than what Twitter provides to its largest enterprise customers. Twitter only offered to provide Mr. Musk with the same level of access as some of its customers after we explained that throttling the rate limit prevented Mr. Musk and his advisors from performing the analysis that he wished to conduct

So... they asked for an API, were provided with it, wanted an API with higher caps, and were provided with it. Their problem is that Twitter didn't properly anticipate the need?

paxys4• 4 years ago

If this goes to the courts then the only two options are he gets to back out entirely or he pays the originally agreed price. There's a chance of a settlement where Twitter agrees to sell for significantly less than that, but (1) there's zero incentive for them to do so and (2) they will definitely not get shareholder approval for that.

One thing for sure though is that a lot of lawyers are about to make a lot of money.

mikkergp5• 4 years ago

a lot of lawyers are about to make a lot of money.

The one thing written in this thread that I am 100% confident is true.

tinktank• 4 years ago

Oopsie. Stonks do bite back sometimes.

andrewclunn• 4 years ago

So then it looks like the "right wing" / anti-establishment tech pantheon is then set:

Rumble, Brave, Truth Social, Subscribe Star

Locals and Bitchute gave it a shot (and aren't dead yet). And an Elon owned Twitter might have been interesting, but at this point that's who the players are.

daemoens7• 4 years ago

All of them are incredibly small though. Most conservatives still use regular social media.

rvz2• 4 years ago

All of them are still bigger than Mastodon. After 6 years, Mastodon failed to show itself to be a proper alternative even during the so-called 'exodus' from Twitter. Given that it is smaller than those social networks, I regard that as a catastrophic failure.

6 years is not early days and Mastodon failed has still failed to attract users from Twitter 2 months ago. No chance of a significant amount of serious users from other social networks migrating over.

timsneath• 4 years ago

It seems apparent to this observer that he developed cold feet pretty fast after an impetuous decision, and has been looking for any reason to back out of it since then. The spam accounts angle seems like a convenient scapegoat, rather than a real surprise to him.

He's clearly eccentric in his approach to decision making: I don't think any Harvard Business School course will teach "the Musk Principles". But it's unclear to me what he initially thought he was getting out of this. In the original news, he said, "Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it." Either he was breathlessly arrogant or astonishingly careless in the first instance. And I say this as someone who has huge respect for his accomplishments in other industries.

tempsy• 4 years ago

This assumes he was serious about it at some point, instead of just cover to sell more Tesla shares and free marketing for himself.

labster3• 4 years ago

Gosh, I hope he was serious at the point he signed a contract with a $1B penalty, or else he’s the world’s worst businessman.

ClumsyPilot• 4 years ago

I would like the consequences of his actions to catch up with him.

A Joe Boggs acting in this fgashion would have been taken to the cleaners long ago.

scotty79• 4 years ago

Either he was breathlessly arrogant

Isn't that like more than half of his MO?

redact207• 4 years ago

My guess is he's hit that obscene level of wealth and realizes he is now beyond the controls of the system, and can therefore game it to his advantage.

When you can afford the best legal team money can buy and payoff the rest of the gatekeepers, then the game is simply to transfer wealth into your own pocket in bigger chunks.

godelski• 4 years ago

Honestly, so what if he's out $60 bn. I don't think this would affect his lifestyle in any way whatsoever. But it would affect his high score. I'm guessing at one point he realized the former but later realized the latter and cared more about that. Though he's still got a 88bn lead on second place so I'm not sure why he cares.

cormacrelf4• 4 years ago

You can’t bribe the judges in Delaware. They can force him to go through with the deal at the agreed price, now at a significant premium on market value, and it’s reasonably likely they will. This was not a genius move.

pclmulqdq9• 4 years ago

He's overleveraged and most of his companies are on the brink of falling below the point where he gets margin called. The poor sap wanted to rescue a few billions of dollars that could actually survive a recession, but he picked the wrong way to do it.

ben_jones2• 4 years ago

Seems like a manic episode enabled by yes-men.

TillE3• 4 years ago

I suspect the initial decision was something like "hey I could actually just buy Twitter, that would be funny". It's less clear to me why he almost immediately started trying to back out. It's probably a waste of a significant chunk of money, but is that all?

9887472• 4 years ago

> It's less clear to me why he almost immediately started trying to back out.

That's what you do when you sober up and realize what a mess you've made.

labster3• 4 years ago

Stocks went down almost immediately after the deal across the tech sector. Financing got harder, he would have sell off a lot of TSLA at a discount to complete the deal.

stingrae• 4 years ago

It also hit at a point when Tesla's stock price started a rapid decent. The Twitter deal is becoming a larger and larger percentage of his net worth.

idiotsecant• 4 years ago

It makes more sense if you assume that Elon Musk is both a sometimes successful businessman and also suffering from unmanaged bipolar disorder.

alasdair_• 4 years ago

The market went to shit almost right after the point where he made his offer. Tesla took a dive at the same time. A lot of the loan he took out is against his tesla stock.

towaway154632• 4 years ago

Did everyone forget about the massive hit the stock market took right after the deal was announced? Maybe that has something to do with it.

atlasunshrugged4• 4 years ago

There's another belief floated by Josh Wolfe (an investor with Lux Capital) who claimed it was a ruse to liquidate Tesla stock en masse without Tesla hodlers getting suspicious and tanking the inflated stock price.

https://twitter.com/wolfejosh/status/1545387947578597376

napier• 4 years ago

Neither of these hypotheses precludes the other.

qaq6• 4 years ago

Wolfe has being on anti Musk crusade for a long time.

Mo3• 4 years ago

I mean, it didn't necessarily take Josh Wolfe to see this as a viable possibility.

marricks• 4 years ago

That’s immensely believable, I wonder how he got someone people onboard to be help him fund it though. It’s even more of a stretch but maybe the rest of them wanted more liquidity too?

slg3• 4 years ago

But Tesla stock did drop after the announcement of the deal. I think that is the real reasoning behind him quickly getting cold feet. He probably thought Twitter would be a fun side project, but the backlash from people in regards to Tesla, SpaceX, and just the general public meant it would be more costly both to his reputation and financially beyond just the sticker price. That took the fun out of it so he has been looking for ways to escape the deal ever since.

pryce• 4 years ago

If someone's stock is as incredibly overinflated as Tesla has been for so long, choosing the most effective way to liquidate stock without triggering a run becomes a social engineering problem with the incentive of a multi-billion dollar payoff.

Honestly I think other people trying to read this situation in some way that ignores a multi billion dollar incentive just sitting there is utterly naive.

MichaelCollins• 4 years ago

a ruse to liquidate Tesla stock en masse without Tesla hodlers getting suspicious and tanking the inflated stock price.

Couldn't he just have said "SpaceX needs more cash" or something like that?

entropicgravity• 4 years ago

The Go masters insist that every stone must have at least two reasons for its placement.

avalys2• 4 years ago

The deal includes a "specific performance" clause, which allows Twitter to force Musk to carry out the deal. He can't simply pay $1 billion and walk away, he's in for a very messy legal fight. This pretext about bots is incredibly weak and he's in no way guaranteed to win.

If this really were part of some grand master plan, I think he would have left himself an easier out.

mikkergp5• 4 years ago

Couldn't he have sold Tesla as part of an offer that still had due diligence and was in negotiations rather than waiving due diligence and committing to a deal?

openthc3• 4 years ago

More than one financial analysit/money manager has floated this idea in our circle. It seems reasonalble; an pointing to the last time he sold a bunch (11B?) and told everyone it was to pay his taxes. They seem to think it was to just convert some high-risk (TSLA) to low risk (Cash, etc).

fisherjeff2• 4 years ago

Sure but then why skip diligence? That would be the ideal time to sell lots of Tesla stock and eventually say “You know what? Nah” without any sticky legal issues.

bandyaboot• 4 years ago

Musk wanted to be warrior king of the internet edge lords. He was not playing chess.

thesausageking• 4 years ago

Note that Josh has been a huge Tesla (and Musk) critic for years, starting as far back as this 2010 tweet:

https://twitter.com/wolfejosh/status/19430106783023104

He's called Tesla a "fraud" and that it would collapse many, many times while it's just kept going up and up and up over the last decade. For example:

https://twitter.com/wolfejosh/status/1178486986790854658

https://twitter.com/wolfejosh/status/1074055027021369344

Mvandenbergh• 4 years ago

AKA the Lou Pai option, which is an extremely funny (and almost certainly untrue) theory that Pai deliberately got caught by his wife with a stripper so that he would be "forced" to liquidate his Enron stock which he allegedly already knew would soon be worthless without having to explain the timing of that to a court later.

hertzrat• 4 years ago

I don’t buy it. Musk compulsively creates huge and innovative companies. To liquidate stock, he could just as easily have just waited until his next big thing and sold off his stock then, once again, in order to pay for a non-Tesla venture; and then either used the money for the company, or bailed on the new company. Involving Twitter doesn’t make sense and is unnecessary

waynesonfire• 4 years ago

why do people assume that all aspects of this transaction and negotiation have been happening in the public and thus qualify for all these folks here to make claims like they know what's going on.

People here don't know what claims in entirety were made by either party, and thus, it's impossible to speculate. This is what courts are for and Elon, and his team, are not idiots.

sulam• 4 years ago

This is such a strange take. There's any number of more effective ways for Musk to justify selling some Tesla stock that aren't especially likely to tank it. On top of that, announcing his intent to buy Twitter did in fact get factored into the stock quite rapidly, in the negative direction as you'd assume, because Twitter is not seen as an especially good investment while Tesla has been.

divbzero• 4 years ago

He’s not the only one to float this possibility. It’s one of the more plausible explanations if you take the assumption that Musk was acting rationally with forethought.

011000112• 4 years ago

Not just Elon but his brother as well.

BenoitEssiambre• 4 years ago

I also read somewhere that if Elon ran Twitter into the ground in the next decade, using it just to advertise Tesla cars, he would have paid an amount in line with what GM pays for advertising their cars (at least what they paid pre-pandemic) https://www.statista.com/statistics/286522/general-motors-ad....

It blows my mind how much (non Tesla) car companies spend just on advertising.

IAmGraydon• 4 years ago

I tend to believe it's something along these lines. The real question is why is he going to such great lengths to liquidate stock? He is not the only high profile billionaire who has recently come up with sudden circumstances to justify the liquidation of massive amounts of stock.

imranhou• 4 years ago

I doubt that is the case, because of such a flimsy reason chosen to back out of the twitter deal, if the plan was all along to create a ruse deal, I think the exit would have been better planned

pid-1• 4 years ago

He made risky bets his entire life and was mostly lucky up to this point.

Most folks who subscribe to the "Musk Principles" aren't nearly as lucky and go bust much earlier.

jessaustin2• 4 years ago

Either he was breathlessly arrogant or astonishingly careless in the first instance.

Perhaps he didn't expect the Nasdaq composite to drop 2000 over the next several months? That could have been careless, depending on the sort of agreement he signed. I guess he can afford a $1B penalty, but good luck finding another buyer after that. It's not as though Twitter are overflowing with ideas for profit...

mlyle5• 4 years ago

I guess he can afford a $1B penalty,

The $1B is if there's some outside reason why the deal cannot get done, e.g. because of regulatory concerns.

It's not a "pay a $1B break-up fee at your discretion to get out of the deal" clause.

Accordingly, the parties hereto acknowledge and agree that the parties hereto shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that any other party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity.

...

(b) Notwithstanding anything herein to the contrary, including the availability of the Parent Termination Fee or other monetary damages, remedy or award, it is hereby acknowledged and agreed that the Company shall be entitled to specific performance or other equitable remedy to enforce Parent and Acquisition Sub’s obligations to cause the Equity Investor to fund the Equity Financing, or to enforce the Equity Investor’s obligation to fund the Equity Financing directly, and to consummate the Closing ....

hourago2• 4 years ago

He's clearly eccentric in his approach to decision making

Being called Eccentric is the luxury of the rich. If he was poor one will say "irresponsible" or even "crazy".

cratermoon• 4 years ago

To quote the great Crash Davis, speaking to minor league pitching phenom Ebby Calvin 'Nuke' LaLoosh, "Your shower shoes have fungus on them. You'll never make it to the bigs with fungus on your shower shoes. Think classy, you'll be classy. If you win 20 in the show, you can let the fungus grow back and the press'll think you're colorful. Until you win 20 in the show, however, it means you are a slob."

ithinkso2• 4 years ago

It is irresponsible to do something eccentric if you cannot afford it

parentheses• 4 years ago

He relies heavily on his average decision-making ability being way above average. By being this volatile he basically captures surprisingly many good risky decisions. At the same time he ends up with things like this.

drivingmenuts• 4 years ago

Market manipulation disguised as free speech advocacy. Pure and simple.

__john• 4 years ago

I think there is a 1A aspect to his involvement with Twitter.

VectorLock2• 4 years ago

But it's unclear to me what he initially thought he was getting out of this.

The best hypothesis I've heard is that he was trying to secure the raw materials that Tesla's stock price is made out of.

bredren• 4 years ago

This is perhaps meant to be tongue in cheek but Twitter is not just influential to Musk's concerns.

Twitter is influential to the concerns of Musk's competitors and potential regulators who might stand in his way.

Regardless of its deflated value, (all assets were way puffed up) Twitter is still extremely valuable.

Arguably, it is still positioned to be worth more than Facebook.

NelsonMinar• 4 years ago

What a blow to his already tarnished reputation. Imagine the conversation next time he tries to acquire a company.

christkv• 4 years ago

Termination fee is like 1 billion I think so it will still be cheaper for him to back out and then buy it when its stock price crumples over the next couple of quarters.

eloff2• 4 years ago

That's only in case he can't get financing. There's no option to pay $1B and walk away. Twitter can sue to force him to complete the deal under the contract they signed.

However I suspect the lawsuit to be settled rather than drag on for years. Probably he'll buy it at a reduced price or pay a larger termination fee to walk away.

UncleOxidant• 4 years ago

Either he was breathlessly arrogant or astonishingly careless

Why not both? Arrogance tends to lead to carelessness.

duxup3• 4 years ago

But it's unclear to me what he initially thought he was getting out of this.

The more it goes on it feels like “I don't like how twitter works, I’ll show them! <insert some less developed ideas of free speech on the internet>”

Later:

“Oh noes if I do what I want here the result might be bad…”

It just feels like a YOLO business deal that wasn’t thought out the more this goes on.

redeeman8• 4 years ago

isnt it also possible he (some might say rather impulsively) decided to buy twitter, and then upon further investigating finds that his quick rationales no longer make sense if bot traffic indeed is way above 5%? that perhaps he feels that if it indeed is way above 5%, twitter is scamming?

is this just 100% unthinkable?

thethought• 4 years ago

What my school teacher used to say about

- cold feet - impetous - eccentric - breathlessly arrogant - astonishingly careless

pupils

whynotkeithberg• 4 years ago

'eccentric in his approach'

by that you mean straight up lying, attempting fraud etc...

taurath• 4 years ago

He is a man who owns and can raise massive amounts of money and promise smart people the ability to build something they want to build. That he gets so much credit for his ventures is a very strange thing to me given how many he has vs how few hours in the day he must have to actually pay any attention to them.

burrows• 4 years ago

So you think he would be more deserving of credit if he only did SpaceX? instead of SpaceX, Tesla, NeuraLink, etc?

WalterBright3• 4 years ago

If he isn't deserving of credit, why has nobody else managed to do it?

recuter2• 4 years ago

The spam accounts angle seems like a convenient scapegoat, rather than a real surprise to him.

It seems apparent to this observer that the spam accounts thing and other metrics were always super inflated and perhaps now there will be a reckoning.

I also think it is very funny how there was much gnashing of teeth and literal tears at the prospect of him owning twitter but now they might end up chasing him and try to force him to buy them, thus further alienating the woke mob and sowing chaos internally. Look how the turn tables have turn tabled.

If they are greedy enough to go to court over it the question of just how fake this company is will stay in the news for the duration of the trial and the stock will tank. If they don't they might have to, you know, actually function like a real company.

This story is far from over.

initplus• 4 years ago

No kidding Twitter has spam/fake accounts, isn't that part of why Musk wanted to buy Twitter in the first place?

He publicly stated that he wanted to buy Twitter to clear up the fake account issue, he knew about the issue before entering the deal, when signing he waived due diligence that could have given him the opportunity to investigate the issue before signing...

Musk's own tweets will work against him if he tries to use the fake accounts issue to back out.

hwers3• 4 years ago

This is such a terrible look for Elon. I’ve really liked him up until now but this just feels like playing with our emotions. Honestly starting to question how much hope there is for mars to happen at all.

plankers• 4 years ago

Honestly starting to question how much hope there is for mars to happen at all.

i spat out my drink reading this

camjohnson2613• 4 years ago

Musk receives a lot of flak because he presents extremely hard problems as easy, and sells the idea that only he can solve them. But this is clearly not true, just look at all the progress that is happening in automated driving and EV technology outside of Tesla, with Waymo, Cruise, and other companies already offering limited driverless rides, and with the Rivian and Ford 150 Lightning beating the cybertruck to market by years.

Real progress takes real work, not promises and marketing fluff. If humanity makes it to Mars it will likely be without his help.

nixass• 4 years ago

But it's unclear to me what he initially thought he was getting out of this

Answer: some sort of stock manipulation whether it be Tesla's or Twitter's

mikkergp5• 4 years ago

I think about Jack Dorsey's endorsement early on:

https://www.cnbc.com/2022/04/26/jack-dorsey-elon-musk-is-the...

This most of all makes me think he was really into it and then fucked it all up. Or Jack was just trying to get back at the board.

WORMS_EAT_WORMS4• 4 years ago

Eh, I think he’s a believer. I like Jack. He dreams big and is pretty inspirational to wild ideas. You are high if you are reading this and think he’s not upset with where Twitter landed.

oneoff786• 4 years ago

The market crash makes it impossible to evaluate. It was a stupid price.

la647103• 4 years ago

Musk is a brown bag of shit.

He sent his selfie in a tweet response to Parag’s tweet explanation.

https://www.forbes.com/sites/abrambrown/2022/05/16/twitter-b...

redeeman8• 4 years ago

so... its just 100% unthinkable Musk is right?

edit: dont know why this had to be flagged. I guess some people really take personal offense in that elon musk might be correct in his thoughts about twitter daily bot %

chernevik4• 4 years ago

It seems like his lawyers aren't very good, and maybe neither his bankers.

bink• 4 years ago

It's hard to be a good lawyer when your client lies to you.

zer0-c00l• 4 years ago

What he was getting out of it was that he was/is addicted to Twitter, and has an outsized view of its overall importance and value.

zouhair• 4 years ago

Well his principles are mostly scamming tactics, because he is mostly a scammer.

nimbius• 4 years ago

why not both?

the real reason he's filing the sec notice is the gas has run out of the bullshit bus. nobody believes his due diligence claims, the board just sent him a resounding vote of approval to buy, and the legal pain train of that comes with anymore of this childish foot dragging sideshow is pulling into the station.

I'd be stunned if he gets to walk off with the billion dollar penalty. too many financial guarantees and backings have been made, and musks had an SEC crosshair on him for years now. they know exactly what patent brand of bullshit he's peddling and have shown themselves more than willing in the past to take action.

musk can file all the notices he wants but i suspect hes about to get ready for the billionaires version of a shotgun wedding.

CRUDite2• 4 years ago

He has made billions using twitter spamming Tesla and doge. It’s a playground for for the guy. And therefore cheap at almost any price. But of course why pay more than needed. On a more semi serious note: it must seem ludicrously easy for the guy. He has laid it all out: Mars needs: VTOL rockets since no infrastructure Methane due to atmospheric constraints Tunnels for transport see also infrastructure Starlink see also infrastructure Direct democracy via twitter ( imperator status exempt )

Have as many kids as possible since it’s obvious he will own the solar system. He ain’t gonna be that democratic therefore. Just another dynasty but maybe the last

CRUDite2• 4 years ago

therefore of course he will buy it

vkou• 4 years ago

Direct democracy via twitter

He doesn't run any of his firms with direct democracy, why on earth would he run his Martian kingdom as one?

TheDudeMan• 4 years ago

"Twitter has tremendous potential"

He may have been honest and correct about that, but later realized that he simply does not have the time to be CEO of yet another large company.

IncRnd• 4 years ago

Actually, these sorts of things are expected in merger agreements, baked into almost all of them. It isn't unusual, when the seller doesn't provide the required data for the purchaser's due diligence that the agreement will terminate.

Who in their right mind would spend billions of dollars without being allowed to "look at the books" regarding the spam account ratio?

BigBubbleButt• 4 years ago

Elon Musk explicitly waived his right to due diligence. You're right about these things being expected, but Elon can't be hampered by such standard conventions.

Natsu• 4 years ago

Well, Twitter (and stocks in general) sorta crashed right after the offer, too, so there's a real question whether that prior valuation makes any sense any longer.

baby• 4 years ago

There’s the HN theory, but then he was invited at twitter answering questions that employees had. Why would someone do that if they were just fucking around.

starkd2• 4 years ago

The twitter board has already announced it intends to litigate this. And they are not after just the $1B fee. That might be what Mr. Musk had in mind when he mentioned he was lawyering up in a few tweets awhile back. Even though he waved due diligence, that might not clear twitter from having lied about the bot problem. I suspect this is going into months of litigation. Perhaps Twitter will be willing to accept a lower price. It might be what Musk is angling for.

hermanradtke• 4 years ago

He didn’t waive due diligence. He chose to forego any due diligence before making an offer.

This isn’t like buying a house…

011000112• 4 years ago

Musk has always had problems(especially with telling the truth), but things seemed to really go downhill after he started doing drugs with Grimes.

slantedview• 4 years ago

it's unclear to me what he initially thought he was getting out of this

You have to look at it from the angle of Musk being a troll and a right wing figure. He wanted to impress his right wing followers by making Twitter a more free and open place for all kinds of speech (even hate, violence, etc). Maybe he realized this was a bad idea and managing Twitter is more a job for a grown up than a troll, so he looked for a way out.

anony23• 4 years ago

Possibly it's because the marketnshit the bed and he felt like he would be overpaying under current conditions.

throwntoday• 4 years ago

While I would agree his offer was absurdly overvaluing twitter, and reason enough to back out after sobering up, if what is being stated in the letter is true, twitter has likely been committing serious fraud.

It has continually been one of the most underperforming platforms of it's size. Head of Data Science resigning doesn't bode well during a deal hinging on the accuracy of the data.

bmitc3• 4 years ago

he developed cold feet pretty fast after an impetuous decision

I don't think it was impetuous. I think he did this all on purpose and planned on using his usual tactics of improvisational manipulation and grandstanding to get what he wanted, whether it was Twitter at a cheap price, manipulating the Twitter stock price to make a quick buck off of his stock purchase, liquidate some of his Tesla stock, seed further discontent on Twitter, spur on rabble around bots (despite knowing full well that Tesla and himself have benefited from Twitter bots and potentially even controlled them), drone on about free speech in some sort of libertarian political play, or whatever else. And it has all failed. Now, he's just gonna let his dirty lawyers figure some way out of it all and move on to the next scam.

marktangotango• 4 years ago

I think that requires a level of competence that Musk has failed to display in the past. Shotwell told an interesting story once, in response to a question like "what's it like to work for Elon?" She related an occasion when she got frantic calls from a meeting Musk was in. In the meeting he had decided to cancel Falcon Heavy to meet a schedule for something else. Shotwell went in and reminded everyone (Elon) they had customers who had already paid for Falcon Heavy and cancelling it wasn't an option and to find another solution. Elon responded like "oh yeah, ok well...."

Then there was BTC to purchase Tesla cars, then there was Doge. The point being I think these types of things indicate Musk, like a lot of smart people can be really, really dumb sometimes. Also a bit Hanlons Razor.

freemint5• 4 years ago

I don't think any Harvard Business School course will teach "the Musk Principles".

Well history is not yet written. They could be taught as negative examples

sizzzzlerz• 4 years ago

One senses there are hoards of lawyers out there gleefully rubbing their hands together and salivating over the feasting to come.

encryptluks29• 4 years ago

And they know Musk is a fool.

legitster2• 4 years ago

Did they wait for Matt Levine's article to drop today before they submitted this?

chrisbolt• 4 years ago

No, Matt Levine is taking today off (as mentioned in yesterday’s article).

Smilliam• 4 years ago

No Money Stuff today :( Monday is going to be very juicy, though I'm hoping for a special Saturday edition to talk about how this is all so very stupid.

peter_retief• 4 years ago

I think he realises that it is worth a lot less than he offered, he will probably walk away from it and get sued.

Any legal experts out there?

patrickaljord• 4 years ago

If he can just walk away and get sued that would probably be cheaper than spending all those billions on Twitter. I'm not a lawyer tho so no idea what's going to happen.

camjohnson2613• 4 years ago

Look around in the thread. M&A experts have confirmed that Musk cannot walk away from the deal, even by paying the $1 billion, unless Twitter lets him.

wyldfire• 4 years ago

Is he an idiot who realized he was in too deep / paid too much? Or was he trying to find a way to discredit their user numbers and wanted big headlines?

nemothekid2• 4 years ago

When Musk made the offer

1. TSLA was trading at ~$1,000 share

2. He offered $54/share

Now?

1. TSLA is trading at $750/share (so if Elon musk was 100% in TSLA, he lost 25% of his wealth).

2. Twitter's comprable, Facebook, fell roughly 33% on revised revenue projections and slowing growth. TWTR roughly tracks Facebook, except for last quarter where the stock hasn't moved due to Musk's offer.

So Musk became poorer, and TWTR, which probably should be trading in the high 20s, has an offer for $54/share; meaning Musk may be paying double what it is currently worth.

I find it pretty amusing Musk has meme'd his way into a disastrous deal.

dylan60410• 4 years ago

Do you really believe that the "if" in 1) is true? Really? Enough to make that comment?

ilikeitdark• 4 years ago

The dude is funny, gotta give him at least that.

paxys4• 4 years ago

This was obvious from the moment he brought up the fake accounts problem.

The stock market (especially tech) tanked, other investors started having cold feet, and he realized his purchase was a mistake.

It is bizarre though that Twitter leadership/board continued to engage with him on the matter – even handing him internal data to analyze – expecting a good faith resolution. Nothing Musk has done in the last few months has been in good faith. You either lawyer up and force him to stick to the agreement, or take the loss and move on. Appeasement isn't going to work.

camjohnson2613• 4 years ago

Bad faith has been Musk’s MO since the beginning. He even deliberately crashed Martin Eberhard’s roadster (allegedly, Tesla claims it was an accident.) https://jalopnik.com/tesla-co-founder-eberhard-sues-elon-mus...

hackernewds3• 4 years ago

Most forget that Elon did not found or invent Tesla

cormacrelf4• 4 years ago

It’s because they want him to pay the agreed price. It is an extremely good deal for the shareholders now, so they are behaving perfectly rationally. And they can possibly force him to.

paxys4• 4 years ago

Yes but it was clear (to all outside observers, not the board apparently) that Musk never intended to pay the agreed price. He was just collecting enough material from them to justify his breach, and fake users was a smokescreen. Their response to any questions/statements about fake users should have been the equivalent of "you signed the agreement, now stick to it" not "let's work together and resolve your issues".

asah• 4 years ago

In fact they have a fiduciary responsibility to pursue this.

jiggyjace• 4 years ago

Have you read the termination letter? The letter was sent by Elon's lawyers working with Twitter's lawyers according to the merger terms they had all agreed to. Why shouldn't they have expected a "good faith resolution"? A termination can still be made in M&A under good faith.

paxys4• 4 years ago

Where did you get the "working with Twitter's lawyers" part? This letter is sent to Twitter's lawyers informing them that Musk is terminating the agreement.

Wowfunhappy• 4 years ago

Presumably, if Twitter goes out of their way to demonstrate good faith towards Musk, it will benefit any potential legal cases in the future.

PKop• 4 years ago

They wanted to cash out of a declining position as much as he wanted to renege on the deal... he was overpaying at that point, why wouldn't they want to sell?

inerte3• 4 years ago

They gave the data because if they didn’t that’s a valid reason for Musk to walk out of the deal. The bots are not.

Inu• 4 years ago

Nothing Musk has done in the last few months has been in good faith.

Isn't this itself arguing in bad faith? It's fundamentally speculative to make claims about his intentions.

bindle89325• 4 years ago

Musk has lied repeatedly in public, so it's difficult to assume good faith from him.

loeg2• 4 years ago

No; Musk has demonstrated with his actions that he is a liar and his word means little. You could look at his “taking Tesla private at $420; funding secured” tweet, or his late SEC filing for his large ownership stake in Twitter where he claimed to be a passive investor days before making this offer, or any number of prior examples. If you assume good faith from Musk at this point, you are a fool.

giaour• 4 years ago

That's not what "bad faith" means. If GP didn't care if their statement were true but just said it to make Musk look bad, then it would be in bad faith.

Musk has been very publicly coy about his intentions for several months, so it's hard not to have an opinion at this point. Just because that opinion may be wrong doesn't mean it's offered in bad faith.

hackernewds3• 4 years ago

The internal data grant could be so Elon has no defense when Twitter is ultimately gonna sue him next. It's coming

gkoberger• 4 years ago

This was always going to be how it ended.

Elon got what he wanted. Everyone on his side now thinks he's a bastion of free speech, and he can forever say "If I owned Twitter, I would have...". And he gets the credit he wants without having to actually do anything.

Twitter got what they wanted. They didn't want Elon to own the company, but they also couldn't ignore the offer. So they called his bluff. They would have ended up with a world of pain if they didn't accept the offer, but nobody at Twitter wanted it to close. And now they'll be able to sue Elon and get the upper hand.

Both sides got what they wanted here. I just wish it didn't have to distract all of us so a few rich people could mutually level up.

bogomipz• 4 years ago

'Everyone on his side now thinks he's a bastion of free speech, and he can forever say "If I owned Twitter, I would have...".'

Doesn't he kind of forfeit that bragging right if he tries to walk away from the deal though?

"Twitter got what they wanted. They didn't want Elon to own the company, but they also couldn't ignore the offer."

What happens to their stock price after this though if this deal doesn't happen? Hasn't it basically been flat or trending down for some time before this current situation? Doesn't Twitter still have all the same problems they had before this current circus started?

Also is there a possibility that if that deal doesn't happen there becomes a bigger spotlight on Twitter's future filings in regards to their quoted percentage of "fake or spam accounts on Twitter’s platform"?

mikkergp5• 4 years ago

Doesn't he kind of forfeit that bragging right if he tries to walk away from the deal though?

I actually don't think so, he gets it more because "liberal big tech tried to screw him and he was smart enough to walk away"

frollo4• 4 years ago

Doesn't he kind of forfeit that bragging right if he tries to walk away from the deal though?

Look at this thread, you'll find enough of his fan calling this a victory because it will expose how corrupt Twitter is or whatever. Reason, common sense and the frigging obvious don't have a grip in their minds.

adrr2• 4 years ago

Twitter is going to be the downfall of Elon. I don’t understand is fascination with it. It’s a big distraction and he alienates a certain percentage of his customers for Tesla.

DoneWithAllThat2• 4 years ago

How exactly would it result in his downfall? Do you think the terminally online even buy Teslas, or use Starlink, or, you know, shoot rockets into space?

dathinab3• 4 years ago

yes, yes, no

adrr2• 4 years ago

His tweets are shared on the news. Like when he accused Thailand diver of being a pedophile.

whimsicalism2• 4 years ago

Do you think the terminally online even buy Teslas,

Absolutely yes

dkjaudyeqooe2• 4 years ago

Elon is going to be the downfall of Elon.

Trying to buy Twitter is just a symptom.

dathinab3• 4 years ago

Because a non small part of his success is based on portraying himself as a form of real world tony stark, mainly over twitter.

Without that he wouldn't have gotten nearly anywhere close to where he ended up.

Because for a lot of his ventures he used that image to collect way more money then the company would normally had gotten and the used the additional money to try to beat the completion enough so that the investors won't complain even through the company didn't reach to promised (and often outright absurd) goal anywhere close in time/at all.

Flankk• 4 years ago

Tony Stark from the comic books was based on Howard Hughes. When they developed the character for film, they used Elon Musk as inspiration for the character. So you have it backwards, Elon was even in Iron Man 2. Most of his PR stunts make the news so I don't think Twitter makes much difference.

notahacker5• 4 years ago

I can believe he used some of that logic to justify the decision to bid for it...

But in reality his ventures collect way more money than companies of those types normally get because he hit home runs in the early internet era, then started tackling some incredibly ambitious hardware engineering problems and built companies that actually started to solve them, complete with an exciting thesis about them being all being linked to Mars colonies. That's where the "Tony Stark" reputation comes from and why people bothered following him on Twitter in the first place.

Sure, some retail investors follow him on Twitter and end up buying his stocks (or some random crypto thing he has no financial connection with but thinks is funny...) because they think he's great, but if the difference actually owning the platform makes to his ability to raise capital isn't absolute zero, it's closer to zero than $44B. And not necessarily positive, because owning Twitter doesn't make batteries cheaper or ease the technical and regulatory challenges of self driving or LEO mesh networks, but it would take up a lot of his time and resources.

eatsyourtacos• 4 years ago

I don’t understand is fascination with it

I think it's simple.. he is insanely egotistical. He thinks he is some super genius. I'm not saying he's not a smart guy, but he was able to benefit from the early dot-com era mostly because of timing- he happen to be a smart guy at the right age of tech when it was much "easier". There are millions of people who are really smart and work in tech but it's not like they can just magically make an insane amount of money like early on.

He thinks because he is the richest person in the world that he has also worked the most and is the smartest. Both are extremely far from reality- but you can't convince someone of him like that.

Anyway- my point is he loves being able to just post a tweet and have however many people read it and talk about it. Similar to someone like Trump- they just love all the attention to an insane amount, and unfortunately technology makes that possible these days.

usefulcat• 4 years ago

Ego is the problem. The Twitter habit is but a symptom.

DelaneyM3• 4 years ago

For anyone thinking he can pay the 1B$ termination fee and walk away, it's not that simple.

The 1B$ is a "reverse breakup" fee, and applies when an outside force (like SEC or financing) prevents the deal. That 1B$ has nothing to do with any choices on either side, and is unlikely to factor into this process.

At this point they're clearly going to trial, and it's not unlikely that the cost to Elon will be somewhere in the neighborhood of the difference between the fair current market value (~20B$?) and the purchase price (~44B$).

My guess is it'll end up being ~10-15B$.

dylan60410• 4 years ago

~10-15B$ is not inbetween the 2 numbers you posited it would be between though.

samatman• 4 years ago

That's not what difference means.

jkrems• 4 years ago

What they said was:

in the neighborhood of the difference between the fair current market value (~20B$?) and the purchase price (~44B$).

The difference is 24B$ which is implied to be the upper bound. 10-15 is in the range 0..24.

beeboop3• 4 years ago

When has there ever been a lawsuit of this sort that was anywhere near $15 billion? What do you base these numbers on?

TheCoelacanth3• 4 years ago

When has a billionaire ever signed a contract for a $44 billion deal this recklessly?

pqdbr• 4 years ago

On the agreement he signed, maybe?

DelaneyM3• 4 years ago

As in my post, assuming this reaches a "negotiated" settlement there are going to be two important values: the original purchase price (OPP), and the fair market value (FMV).

If Twitter "wins", they get Elon to pay the full market value. Now, they don't actually want Elon to be involved, so if Elon pays the difference between FMV and OPP (~$24B) that's essentially the same as buying then divesting with fewer steps.

If Elon "wins", he gets out paying nothing.

So the range is 0 to $24B.

Elon has a terrible case here, so the best negotiating tactic he has is being a disruptive asshole so TWTR just wants it done with (this is playing to his strengths). I'm also making a big assumption about the FMV, which could easily rebound a bit by EOY. With those factors pulling it down from 24, I'm expecting in the 10-15 range, and if I had to guess I'd say $12.5B.

Pick your own inputs for your own estimate, but this is the deal structure.

quickthrower2• 4 years ago

Are lawsuits limited by max(previous settlements)?

danielmarkbruce9• 4 years ago

texaco v pennzoil.

duncanawoods• 4 years ago

Big Tobacco settlement - $206 billion

Deepwater settlement - $20 billion

VW Emissions settlement - $14.7 billion

iLoveOncall2• 4 years ago

the difference between the fair current market value (~20B$?) and the purchase price (~44B$)

Why would the current market price have anything to do here? Twitter want him to be forced to buy for $44B, not a penny less.

TheCoelacanth3• 4 years ago

The original purchase price minus the current market value is how much they lose if he backs out of the deal, so that's the ballpark of what they would want to get paid to let him not buy Twitter.

devoutsalsa2• 4 years ago

Having to spend $15B as the cost for making an impulsive decision (when you can afford it) is a first world problem.

Ekaros2• 4 years ago

When does a decisions stop being impulsive? Probably at point when enough lawyers are hired to write a contract...

hef1989817• 4 years ago

Tesla and SpaceX success is depending on the public opinion of Musk. If he ends up paying 15 billion (or whatever the number is) over a botched take over, one that had a negative impact on Tesla shares, this opinion might just change. In which case Teslas future preception as a tech company might be at risk.

tommoor• 4 years ago

It's also a world first problem

mikewarot3• 4 years ago

So my hunch that this could lead to him going broke isn't completely off base?

I figure he ends up having to pay $10E+10, and everyone knows it, so he gets short-squeezed in Tesla stock, then margin called on any loans against his stock... then POOF

imdsm2• 4 years ago

$10 bn out of $200+ bn won't make him go broke though. Don't see the logic in that, Mike.

kgwgk2• 4 years ago

he gets short-squeezed in Tesla stock

What?

freemint5• 4 years ago

You can't short squeeze a seller. Sorry you just can't.

codeulike• 4 years ago

I stand by my theory that the whole thing was a displacement activity that caught his attention instead of something else more arduous that he was supposed to do that month.

Like when I suddenly develop an interest in Columbo trivia when actually I'm supposed to be doing my accounts.

encryptluks29• 4 years ago

Would be even funnier if it had to do with impressing a woman.

petilon9• 4 years ago

This is good for Twitter, and good for the world. Musk's misguided approach to free speech, which says anything that is not explicitly illegal is allowed, would have made Twitter an open forum for spreading lies and hate.

My guess is Musk never intended to buy Twitter. He needed an excuse for dumping billions of dollars' worth of TSLA at its peak (while at the same time faulting Bill Gates for shorting TSLA), and his proposal to buy Twitter provided a convenient cover.

Hamuko3• 4 years ago

This is good for Twitter

Well, especially with that billion dollar termination fee (well, if they get it since Musk is probably gonna lawyer up now).

h2odragon• 4 years ago

Musk's misguided approach to free speech, which says anything that is not explicitly illegal is allowed, would have made Twitter an open forum for spreading lies and hate.

Twitter is of course currently known as a source of Truth and Harmony.

"anything not illegal is allowed" sounds decent to me; if you want stuff illegal, make it illegal. If you want unwritten laws dreamt up by anonymous elites and enforced for random reason, go talk to Tipper Gore and the PMRC.

plokiju• 4 years ago

That includes spam though

MallocVoidstar• 4 years ago

"anything not illegal is allowed" sounds decent to me; if you want stuff illegal, make it illegal.

Twitter is based in the US, the 1st Amendment protects hate speech such as explicit support for genocide. I don't consider a social network full of genocide promotion to be a good thing.

anigbrowl• 4 years ago

"anything not illegal is allowed" sounds decent to me

And there are numerous forums where that standard is applied; Twitter just happens not to be one of them because they like money.

tzs2• 4 years ago

Have you spent much time on "anything not illegal is allowed" forums?

Try to talk about popular movies are TV shows and you get things like this on such sites [1]. Want to discuss an episode of PBS Space Time such as this one [2]. Don't be surprised if this is the discussion you get [3].

What almost always happens on such forums is that the people there who aren't racists, sexists, antisemites, inane conspiracy theorists etc., leave, and the forum ends up being largely just such people.

[1] https://web.archive.org/web/20201225021055/https://voat.co/v...

[2] https://www.youtube.com/watch?v=RlXdsyctD50

[3] https://web.archive.org/web/20201223123156/https://voat.co/v...

joshuamorton5• 4 years ago

So when you say anything not illegal is allowed, do you mean that I can post porn anywhere? That spammers and bots can't be banned?

Any remotely reasonable approach here has the state deciding which attributes can be used for moderation decision and which can't, which also isn't feasible.

tick_tock_tick6• 4 years ago

Musk's misguided approach to free speech, which says anything that is not explicitly illegal is allowed

What is free speech but that.....

would have made Twitter an open forum for spreading lies and hate.

Like it isn't now. Twitter lets pretty much anything and everything except hate against specific subgroups they've decided are "protected". It really doesn't help there choices are entirely arbitrary with no internal consistency.

drexlspivey4• 4 years ago

Why does he need a cover to sell his stock? He sold $10B+ last year without the twitter excuse. Also TSLA stock in March was at least 40% below it's peak

petilon9• 4 years ago

Why does he need a cover to sell his stock?

Wouldn't he look to be a hypocrite otherwise? [1]

[1] https://nypost.com/2022/05/31/elon-musk-calls-out-bill-gates...

Banana699• 4 years ago

spreading lies and hate

It's very funny how those things came to be known as code words for the *true* offenses, which we all know very well.

What a waste of perfectly good words that used to have meaning.

rappatic• 4 years ago

Musk's misguided approach to free speech, which says anything that is not explicitly illegal is allowed

That's what free speech is, whether or not you agree that such a policy of unrestricted free speech is constructive or beneficial.

petilon9• 4 years ago

Disagree, there is no absolute freedom of speech, for example you can't yell "fire" in a crowded theater.

Also disagree that such unrestricted free speech is constructive or beneficial. Sacha Baron Cohen explains it best: https://www.youtube.com/watch?v=ymaWq5yZIYM

mft_3• 4 years ago

Musk's misguided approach to free speech, which says anything that is not explicitly illegal is allowed

Genuinely interested, and not just trying to argue: how would you otherwise define free speech? It sounds like you think free speech should have defined limits - which surely means it's not free speech any more?

petilon9• 4 years ago

I am going to let Sacha Baron Cohen, of all people, answer your question [1]:

Voltaire was right when he said "Those who can make you believe absurdities can make you commit atrocities." And social media lets authoritarians push absurdities to millions of people. President Trump using Twitter has spread conspiracy theories more than 1700 times to his 67 million followers.

Freedom of speech is not freedom of reach. Sadly There will always be racists, misogynists, anti-Semites, and child abusers. We should not be giving bigots and pedophiles a free platform to amplify their views and target their victims.

Zuckerberg says people should decide what's credible, not tech companies. When 2/3rds of millennials have not heard of Auschwitz how are they supposed to know what's true? There is such a thing as objective truth. Facts do exist.

[1] https://www.youtube.com/watch?v=ymaWq5yZIYM

kmlx• 4 years ago

This is good for Twitter

i think you are referring to twitter.com

imo this is pretty bad for twitter the company. they’ve been flat for years, they’re current valuation is less than in 2013. they’ve lost the plot a while ago and seem to have been in a managed decline, probably because they were looking for buyers.

and good for the world

you are overestimating how many people care about twitter outside of the US.

TedShiller3• 4 years ago

He achieved something good though: he exposed Twitter as a corrupt, biased company full of spam bots.

Thank you Elon

bindle89325• 4 years ago

He didn't though

TedShiller3• 4 years ago

I never knew about them until he mentioned them

daemoens7• 4 years ago

Everyone knew about the spam bots. They're spam bots so they're extremely visible.

TedShiller3• 4 years ago

I didn’t

adoxyz• 4 years ago

The Twitter deal always felt like a cover to sell a bunch of Tesla stock at the peak and cash out. Looks like it worked out for him.

MBCook4• 4 years ago

Depends on how big the fine he ends up with is.

9999• 4 years ago

I assumed he'd exit Tesla on a longer timeline, but his recent political shifts do make it seem like he plans to exit Tesla as quickly as possible.

ivraatiems2• 4 years ago

The best thing that could come out of this would be Twitter forcing Elon to make the purchase, then Elon closing the company down out of spite.

In that case, everybody I don't like loses, which is pretty close to me winning, I think.

rcMgD2BwE72F• 4 years ago

Facebook would be winning big time.

ivraatiems2• 4 years ago

Ugh, good point. They're doing a decent job of virtually digging their own meta grave, though.

tux2bsd2• 4 years ago

He could hide all existing tweets but have one last tweet: I won.

tux2bsd2• 4 years ago

Even better: He could retweet that using all the bot accounts that "don't exist".

nolok4• 4 years ago

His buying offer includes a fair number of Co financers, he can't just close on them. You just have to look at what happened to solar city (or even the genesis of starlink as a feeder for SpaceX) to know that not screwing with his big investors is the one thing he seems to take seriously without letting his ego screw it all up.

crikeyjoe3• 4 years ago

Lots of Twitter fraud here.

maxander• 4 years ago

I recommend Matt Levine’s blog Money Stuff [0] for analysis of just how bizarre Musk’s twitter saga is relative to usual day-to-day corporate acquisitions. I also recommend his twitter thread just now breaking down his reaction to today’s news [1]

[0] https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...

[1] https://twitter.com/matt_levine/status/1545519476707319808?s...

jl6• 4 years ago

What a ridiculous waste of time and energy for someone who should have better things to do. What part of his solar/EV/Mars vision was dependent on him owning Twitter? I hope he makes a swift and clean exit from this mess, but with enough bruises to teach him a lesson.

sharken• 4 years ago

Seems like there is only one loose end left: will he or will he not avoid the 1B penalty for backing out.

How that goes is anyone's guess.

MBCook4• 4 years ago

Not, plus additional penalties. See:

https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...

DoneWithAllThat2• 4 years ago

Well that’s certainly an editorialized title.

minimaxir5• 4 years ago

and this is why nobody should be reporting it as "Elon Musk ends Twitter deal." Musk is TRYING to back out of the deal, but Twitter plans to try and enforce the merger agreement. The battle begins

https://twitter.com/tomwarren/status/1545527519008509952

hunterb1233• 4 years ago

ITT:

- Elon is stupid, haha he will lose money.

- Elon is evil, he's trying to pull a fast one on this corporation!

- Elon waived his rights, he shouldn't have agreed to their fake numbers!

- Twitter is allowed to claim whatever % of spam bots they want for the deal.

- Twitter's censorship is actually a good thing, here's why...

thirdvect0r• 4 years ago

With age, you will look back on your infantile attitude to this situation and realise that you were simply a rube.

hunterb1233• 4 years ago

You went straight to personal attacks. You may be the one that needs to grow up.

If you disagree with my summaries or don't think they occurred in the thread, dispute it. I see no reason to attack me personally.

gsibble7• 4 years ago

Well put.

Also:

- I'd hate it if Elon bought Twitter

Same person:

- What? This is bullshit! Elon should be forced to buy Twitter!

padjo• 4 years ago

I am that person and I’m very disappointed in myself for it.

But the idea of someone buying twitter against their will just cracks me up.

Also really punctures the visionary genius narrative.

notahacker5• 4 years ago

ITT

- Elon is a genius, he doesn't make mistakes

- Elon's Twitter purchase offer isn't an ego trip or a distraction, he actually has a plan to make Twitter earn its keep

- People keep saying that spending money on an overvalued asset that has zero fit with his engineering experience and ambitions will make Musk poorer, not richer, but none of those people are as smart as Elon Musk

- Elon's decision to waive due diligence and enter a binding contract shows he knows what he's buying and isn't messing around

- Elon deploying gagging clauses and/or financially ruining people for criticising him or his companies is actually more an indication of the important role he's playing in defending free speech, not his narcissism, here's why...

[a month or two later]

- Can't believe Twitter deceived poor little lamb Elon Musk into being the only user of their website unaware of the proliferation of bots on it. This changes everything!

hunterb1233• 4 years ago

I don't think we are reading the same thread or even the same site.

qaq6• 4 years ago

An alternative theory all the people who have being really upset about him buying Twitter are now actually cheering for him to be forced to buy it. So he got to shift the sentiment for free :)

gsibble7• 4 years ago

There's something really messed up and confusing about all the people complaining about him buying twitter now complaining he's backing out of the deal. Most of the people in these comments are hypocrites.

daemoens7• 4 years ago

That's not how hypocrisy works.

TAForObvReasons• 4 years ago

It's not hypocritical to complain that:

1) Elon Musk, as owner of Twitter, would prioritize profits over free speech and other concerns.

2) Elon Musk, as a participant in a binding legal agreement, should not be allowed to break it on a whim.

roflyear8• 4 years ago

No. You can think it's bad he will control Twitter and also that it's bad that he thinks he can do whatever he wants and get away with it (like harm all the Twitter shareholders etc)

mzs3• 4 years ago

The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.

Bret Taylor, Twitter board chair - 4:51 PM Chicago time · Jul 8, 2022

https://twitter.com/btaylor/status/1545526087089696768

lettergram2• 4 years ago

The most likely scenario is a settlement at a lower price imo. Musk was never going to pay the original offer because it was / is well known Twitter has a bot problem. He surfaced the issue and is threatening to scuttle deal based on twitters throttling the API. Which is limiting the due diligence ability of Musk’s financiers to appropriately evaluate their investment.

Now the negotiations will take place and I suspect we will see something like a $10-$20B purchase agreement. Musk will have opportunity for due diligence if they sue. If they don’t sue him, then the shareholders sue Twitter (ironically probably some of the financiers).

roflyear8• 4 years ago

In what fucking universe do you think they would settle on $10b lol. You guys are crazy.

rocqua10• 4 years ago

Musk did not 'surface the issue'. He was complaining about bot numbers being higher than Twitter said looong before he ever signed the merger.

Musk does not have a right to due diligence. Just a right to 'information reasonably relevant to the business'. And he has no right to terminate the merger based on that information.

Forgeties795• 4 years ago

Which is limiting the due diligence ability of Musk’s financiers to appropriately evaluate their investment.

He waived his DD so that’s 100% on him and his unchecked ego, like most of his problems he likes to blame on everyone else.

DonHopkins• 4 years ago

Hit it, Frank:

https://www.youtube.com/watch?v=K_WgCGOWae4

We must watch the stuff you make.

You have let us eat the cake.

While your accountants tell you, "Yes, yes, yes!"

You make expensive ugliness, how do you do it? Let me guess...

fffox2• 4 years ago

Most people seem to be giving him the benefit of the doubt that he has cold feet. Personally, I think this was sabotage, he had no intention of buying Twitter in the first place and this was just a ploy to fuck with Twitter.

TillE3• 4 years ago

Doesn't really add up, because he's going to be forced to go through with the deal anyway. I haven't heard a single lawyer with relevant expertise suggest otherwise.

Since that's where we're going to end up, it would be much simpler for him to just cleanly buy Twitter, for whatever purpose he intends.

fffox2• 4 years ago

actually, at first he said he didn't care about the bots and was buying to FIX the bots issue: https://techcrunch.com/2022/04/14/elon-musk-buying-twitter-t...

then all of a sudden he cared, after he had signed.

trixie_3• 4 years ago

Yes it's all a conspiracy and he's playing 5 dimensional chess.

somenewaccount14• 4 years ago

I really don't understand why you all think Elon is going to pay anythying.

The 6.4 provision is pretty standard, and often the reason for deal to fall through, in that enough of the requested information was not provided. You really don't know what was asked, what was ignored, and what garbage data was sent back. You think Twitter is all innocent? Pfffftt. Don't be evil, oops, i mean naive.

He doesn't have to prove fraud, or malice, or that it wasn't worth it....all he has to show is that requests were ignored, rebuffed even though they are reasonable, and responded to with bad data. That's not really a hard case to win.

MBCook4• 4 years ago

I don’t believe his purchase was contingent on anything. I don’t think he’s allowed to back out.

Also that billion dollar number was not a get out of jail free card. He can’t just decide to pay it and walk away. It only works under certain circumstances.

I don’t believe your analysis is correct. At least it doesn’t match what the legal experts at CNBC seem to think.

https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...

somenewaccount14• 4 years ago

Those monkeys at CNN are just there to turn the popcorn machine handle. I'll bet $100 gentlemen's wager his lability won't be over $100 mill.

gsibble7• 4 years ago

Seems to me he makes a pretty sound argument here to back out.

hansword4• 4 years ago

Are you a lawyer? Because 5days ago, you wrote "I am a developer..."

If you are not, where does the "all he has to show...." part come from? Do you have a source?

somenewaccount14• 4 years ago

LOL. The hate for Elon is strong in this one.

You don't have to be a lawyer to have legal experience mate.

I'm sorry my opinion bothered your grandness.

ROFLMAO.

strangeloops85• 4 years ago

This is going to Delaware Chancery court, and if his ridiculous claims hold it does turn upside down long-held general principles of mergers and acquisitions that would affect.. everyone. I don't think the court will side with him on this. In the past, they have forced mergers to go through..

hwers3• 4 years ago

So embarrassing if he ends up being forced to own it and everyone knows he tried to back out.

metadat2• 4 years ago

Embarrassment is the least of his problems at this point.

encryptluks29• 4 years ago

And if the SEC steps in regarding his selloff of Tesla stock puts him in jail and he gets sued by their shareholders and Twitter's too.

metadat2• 4 years ago

How much foot dragging does the Delaware Chancery Court usually tolerate in these sorts of situations?

Asking for a friend xD

DelaneyM3• 4 years ago

Very little, actually. The Delaware Chancery Court is arguably the US's most efficient judicial institution. They don't mess around.

I wouldn't be surprised if it's concluded by EOY. If Elon wanted to drag it out he'd have waited the full 6mo review period before making his intent official, and Twitter clearly wants it done with.

The only way I see this dragging out is if shareholder lawsuits from Elon's filing "mistakes" or SEC actions (for any of a dozen good reasons when Elon's involved) muddy the waters.

kylehotchkiss• 4 years ago

So glad HN got back online when the day got interesting

x86x873• 4 years ago

What was up with that? Was it server failure? Did HN move from old vps provider to AWS? Also, does HN run on one EC2 instance?

bediger40004• 4 years ago

I guess we'll never see how a free speech Twitter works. I think this is sad.

gsibble7• 4 years ago

You're being downvoted. Another sad day on HN when free speech is downvoted.

camjohnson2613• 4 years ago

This has nothing to do with free speech.

dotopotoro• 4 years ago

Was gp sarcastic? Are you sarcarstic? (I need an app for that..)

gsibble7• 4 years ago

Could you commenters please make up your minds over whether you want the deal to go through or not? You all seem to hate that Musk would make Twitter more conservative so you don't want the deal to go through, but also make fun of him and torment him for pulling out as if you do want the deal to go through. You can't have it both ways.

Either you want the deal consummated or you don't. Stop being such hypocrites.

jeremyjh• 4 years ago

We definitely can have it both ways. We don’t want him to buy Twitter - because he is an idiotic blowhard. Also we are happy he is backing out, because it demonstrates what an idiotic blowhard he is.

gsibble7• 4 years ago

That's fine, but then you can't celebrate that he may be forced into buying it which a ton of comments here are doing.

daemoens7• 4 years ago

They still don't want him to do it, it's just funny that he's being forced into doing it now. It's not hypocritical to laugh at him for that.

gsibble7• 4 years ago

HARD disagree. If you don't want him to own it, you should be happy he's walking away.

compiler-guy2• 4 years ago

This may be hard to believe, but HN is made up of thousands of posters with a wide variety of opinions.

The fact that some people want the deal to go through, and some don’t, and that they post at different rates in different threads, doesn’t mean that any individual person is a hypocrite. Nor that HN in general is.

cozzyd2• 4 years ago

Wow, this is almost as embarrassing as the Las Vegas Tunnel...

tick_tock_tick6• 4 years ago

I'm super excited for this to go to court. If nothing else we've known Twitter has massive internal issue on how it polices content, reports number, bans people, etc. The leaks out of this case are going to be so juicy.

Hopefully they are bad enough we could get real legislation that if you want protection from user generated content you can't just ban whatever you feel like.

bandrami• 4 years ago

He spent a billion dollars to troll hand-wringing Twitter users

nemo44x3• 4 years ago

Why would he spend $44B on a company worth $28B today? I’d make a new offer of $35B. They’d probably accept.

compiler-guy2• 4 years ago

Because he signed a contract to that effect, without any contingencies if the stock went down. He doesn’t really have a choice except to go through an extended legal process that likely will end up going against him.

nemo44x3• 4 years ago

I’d rather lose $1B than $15B. Stock will rank to < $10/share over next year now.

manquer2• 4 years ago

They can’t accept anything like that , twitter board would get sued by their shareholders for any price renegotiation.

Shareholders would sue them as most legal theory says twitter would win in court and enforce the deal, so there is no reason for the board to renegotiate instead of going to court, the board has fiduciary responsibilities.

nemo44x3• 4 years ago

Why not? Elon would be snarky to not buy and only lose $1B vs $10B. Clearly after investigation the company isn’t worth that and the public markets will vet forget. The stock likely tanks to < $10 over the next year now.

They should be happy to get $35.

geoffmunn• 4 years ago

I always thought this was a weird purchase. All his other businesses have been industry disrupters where he can make all sorts of bombastic claims and promises of new products, but Twitter was an established company in a stable(ish) industry.

It was really hard to see how he would apply his usual tricks, and I always figured he was going to wiggle out.

kringo2• 4 years ago

I like him for his entrepreneurship and big bold bets.

However related to Twitter, looking what's happening since his first tweet, this was the plan all along. Come up with an excuse to get out of the deal. Just he was trying to cash in all the marketing he can like always.

I don't think its going to work the way he thinks in this case, its atleast going to cost him $1b

hwers3• 4 years ago

Surely 1bn could have afforded a lot more and better marketing..

kringo2• 4 years ago

for sure :-)

riffic2• 4 years ago

Federated social networking based on W3C ActivityPub or a successor protocol will eclipse Twitter on a slow, but finite timeframe.

Twitter could even build a business model around that - They can manage hosting and the sales of Twitter services as a SaaS on your own domain name like Office 365, Google Workspace.

Or someone could snatch this market right now with their own first-mover advantage (I can see Mastodon gGmbH positioned to do so). I'd do it myself if I had the time and energy.

naveen99• 4 years ago

So is there a court that can enforce the merger agreement ? What’s the worst Delaware can do ?

madrox• 4 years ago

Everything about this deal strikes me as Elon trying to buy his way out of the fact he illegally acquired stock in a bid for a board seat. At the time, I'm sure he thought it was a clever way out of an immediate problem, and he certainly moved the conversation away from his stock buying shenanigans. I just don't know how he didn't see how the outcome would be...owning Twitter.

So many people have gotten very close to buying Twitter...even Disney. The surface appeal is high but once you think about it for more than ten minutes it's clearly a problematic platform with few solutions that don't drastically lower its value. If Elon ends up not closing this deal with Twitter, I suspect that Twitter will go the way of Tumblr...eventually getting bought by a second tier tech company before being mismanaged into irrelevance.

dqpb• 4 years ago

illegally acquired stock

Illegal how?

Forlien• 4 years ago

Not the OP, but when an investor acquires more than 5% of a stock, they have a limited time to disclose it. Elon disclosed his Twitter stock acquisition too late (20 days after instead of 10) and using the wrong form (Schedule 13G instead of Schedule 13D), painting him as a passive investor rather than an activist.

https://www.bloomberg.com/opinion/articles/2022-04-06/elon-m... talks about it.

nequo• 4 years ago

Good analysis.

If Elon ends up not closing this deal with Twitter, I suspect that Twitter will go the way of Tumblr...eventually getting bought by a second tier tech company before being mismanaged into irrelevance.

Has Musk demonstrated that he has a viable business plan for Twitter that would help it avoid mismanagement into irrelevance?

roflyear8• 4 years ago

Who cares? He's taking the company private.

evilotto• 4 years ago

Did Elon ever really intend to buy Twitter in the first place, or was he just looking for a way to get inside information about the company without paying for it like twitter's "largest enterprise customers" do? Then he could dig up a reason to abandon the deal, and back out without losing anything, and having gained much valuable information that could be used against Twitter in some other spat.

camjohnson2613• 4 years ago

Twitter is responding with legal action:

“ Bret Taylor, chairman of Twitter’s board of directors, tweeted Friday afternoon that the board plans to pursue legal action to enforce the deal at the price and terms originally agreed upon.

We are confident we will prevail in the Delaware Court of Chancery,” Mr. Taylor tweeted. Parag Agrawal, Twitter’s chief executive, retweeted the message.“

https://www.wsj.com/articles/musk-says-he-is-terminating-twi...

godmode20196• 4 years ago

I can tell you Twitter took the not question seriously. I have only used twitter once when my company had a notice board you needed to tweet to, over 7 years ago.

After musk started talking about bots, I started getting a ungodly amount of twitter emails asking me to sign in and see watt my friends are doing ect. Over 10 a day for the last month or so.

My email is literally filled with twitter emails trying to activate my inactive account to temporary inflate their numbers.

Musk didn't have buyers remorse, we entered a huge market crash in the middle of the deal, so twitter was not worth nearly as much. Likely worth around $15 USD per share.

Everyone knows twitter is majority bots, gpt influence accounts. Musk was using that angle because they would never admit to it publicly as it would likely have stock or legal issues.

He likely still wants to but twitter at the current market value, not yesterdays current value.

telesoft• 4 years ago

My email is literally filled with twitter emails trying to activate my inactive account to temporary inflate their numbers.

Big if true

godmode20196• 4 years ago

I just went and double checked, 4 emails a day for the last month ( not 10). All the same email suggesting I login.

I have not logged into twitter since 2016, no friends and no followers. Just set up for my company noticeboard.

jungle2jungle10• 4 years ago

Everyone knows twitter is majority bots, gpt influence accounts

You are writing fan-fiction, not making an argument.

godmode20196• 4 years ago

Most of social media is PR companies running bot farms, this has been the case for many years. Especially around African elections (well studied) or large social issues ( Johnny deep court case )

My country is notability bad they close the comment section so real accounts can't out comment the bot accounts, our government has social media influence programmers running this, people I know. ( small country )

They use gpt 2 to generate around 100 curated comments for each news article, You can typically tell by going into their account and seeing when they joined and friend count ect. However recently they started hiring normal people to comment.

This has been the PR industry for at least 4 years.

godmode20196• 4 years ago

Their was a guy on here a few weeks ago that made 10% of all comments on 4chan using three bot accounts over the span of a month, running gpt-j fine tuned.

You need so remarkably few people/PR agencies to outnumber active humans.

Its such a problem creating a social media account is actually quite hard, often you need a phone number and a separate IP address.

Animats2• 4 years ago

Tesla needs to focus. Two major assembly plants are down for line rework because the line runs too slowly. The battery factories are behind schedule. Solar roof installations are way under goal, despite high energy prices. "Self driving" is a flop. And whatever happened to the Cybertruck?

Tesla is a car company. They need to focus on making cars. They're past the startup stage. To grow into that bloated market cap, they need to make a lot more cars. Production. That dull and boring stuff Detroit and Toyota do well.

beeboop3• 4 years ago

Can you provide the detailed schedule for battery factories? Can you provide the communications that show the lines are running too slowly? Can you provide the development roadmap for self driving to demonstrate it's ceasing to have progress? Can you provide evidence that the equipment in Giga Factory in Austin that's installed and ready to build the cyber trunk isn't going to be used for that?

Animats2• 4 years ago

Yes, but there is a service charge for doing homework.

frollo4• 4 years ago

Tesla is a car company.

Tesla is a very complex financial operation which, sometimes, sells some cars. From Musk's point of view it's working exactly as planned.

toast0• 4 years ago

> Tesla is a car company.
Tesla is a very complex financial operation which, sometimes, sells some cars.

That's not that unique, my understanding is most of the major car companies are primarily in the business of auto financing, but they make cars to give people something to finance.

chernevik4• 4 years ago

The filed letter (https://www.sec.gov/Archives/edgar/data/1418091/000110465922...) isn't the knockdown argument I would be expecting.

Musk is saying, you haven't demonstrated your numbers are accurate. But having signed the merger agreement and waived due diligence, I think he needs to demonstrate that they are _not_ accurate. Complaining Twitter rate-limited his API access (which would be very foolish on their part) or that their bot measurement standards are "arbitrary" doesn't seem to get there.

The letter complains that Musk asked for data allowing him to "independently verify Twitter's representations regarding the number of mDAU" -- but where does the agreement provide for that verification as a condition of the deal? Maybe Twitter didn't provide sufficient information for Musk to "independently verify" that number -- that means nothing without showing Twitter had a duty to provide that information, or that Musk had a right to his own verification. (Any lawyer agreeing to the other side's verification of such a thing probably isn't a very good lawyer.)

The last paragraph, complaining about firings and hiring freezes and departures, seems positively desperate. Who seriously cares about this stuff?

"I relied on your numbers but now they seem soft" is different than "I relied on your numbers but now they are clearly wrong".

I have enormous respect for his engineering and business skills, he's accomplished some remarkable things. But he doesn't seem so great as a dealmaker. Perhaps he's badly advised, but hey, he chose his advisors.

I would think Twitter will sue for specific performance, and they probably have a case. And Musk is liable for their full market cap, and any trial would depend on a legal team that has a hard time writing a clear letter. I think Musk is in trouble here.

np1810• 4 years ago

Well, here's the tweet from Bret Taylor (chair of the board at Twitter)...

https://mobile.twitter.com/btaylor/status/154552608708969676...

"The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery."

shuckles3• 4 years ago

Twitter has already said they'll sue for specific performance: https://twitter.com/btaylor/status/1545526087089696768

elliekelly7• 4 years ago

My heart sank when I read your comment: why on earth would the board sue for specific performance!? But my reading of the statement in the tweet is that they plan to sue for enforcement of the agreement which I believe means paying the agreed-upon penalty for backing out of the deal. I don’t at all read that statement as a plan to seek specific performance.

xenadu02• 4 years ago

It will eventually settle. If they sue and win Musk's financing will have long backed out so they aren't going to end up with enough to close the deal.

I suppose they could force him into bankruptcy which would end up with his ownership stakes in Tesla and SpaceX sold off. Given how much of a loose cannon he's become that would probably be better for other shareholders but who knows.

georgeecollins2• 4 years ago

Right- he waived diligence. Twitter has no obligation to prove anything to him. Twitter is obligated to give him documents if they are reasonable to request and helpful for him in financial planning. If the documents Twitter has on hand are flawed or not comprehensive, that doesn't give a pretext to leave the deal. I am sure his lawyers know this and it will all be negotiated.

meragrin_2• 4 years ago

If Twitter fails to provide reasonable access to data necessary to secure debt to finance the purchase, it does indeed give a pretext to leave the deal. It is part of the merger agreement. You can't tell me that a lender would not want some independent assessment of Twitter's claims before lending.

redeeman8• 4 years ago

waiving diligence does not mean that twitter can misrepresent things though. I do not know what the true amount of bot participants are, but IF it is above 5%, that would not be something "due diligence" had to discover, twitter says <=5%, and it had better be that then.

fundad• 4 years ago

How can any judgement in Twitter’s favor be enforced?

Mail a bill for $1B or more and somehow collect the debt?

Maybe the bank could choose to execute the purchase agreement but why would they since they (ironically) can’t force him physically show up and run Twitter.

I doubt SEC has any measures they can take through Tesla which would be weird.

He didn’t agree to “specific performance” expecting that to matter to him.

meragrin_2• 4 years ago

Musk is saying, you haven't demonstrated your numbers are accurate.

It has nothing to do with accuracy. Twitter is supposedly not providing the data: 'While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consummation of the transaction,” Twitter has not complied with its contractual obligations.'

The letter complains that Musk asked for data allowing him to "independently verify Twitter's representations regarding the number of mDAU" -- but where does the agreement provide for that verification as a condition of the deal?

Section 6.11, the part of the deal where Twitter needs to provide necessary information to secure debt: 'and under Section 6.11 of the Merger Agreement, to information “reasonably requested” in connection with his efforts to secure the debt financing necessary to consummate the transaction.'

I have little doubt anyone lending that kind of money would require the buyer to independently verify the mDAU.

chernevik4• 4 years ago

I will be very surprised that Twitter's position was less than "you can have anything you want", precisely to avoid any complaint of non-cooperation.

I do agree that the agreement's debt financing provisions may provide Musk an out -- "I wanted to close, but I couldn't get debt b/c you wouldn't cooperate".

I'm a little surprised that Twitter agreed to any sort of financing provision, precisely because it seems to allow Musk to screw up his debt raising and then point to that as an out.

But that is not a complaint in the letter, and becomes an argument about what lenders require for debt financing. Musk will have to show that lenders cared about this, and Twitter will have discovery to find evidence they didn't.

sbf5012• 4 years ago

Twitter is supposedly not providing the data

Didn't he get access to the firehose, which is, AFAIK, -ALL- the data? (not the 50GB he tweeted about but supposedly a 2TB/day stream?)

tptacek12• 4 years ago

Musk already secured financing, and most of the recent financial engineering he was doing was in the service of minimizing his own exposure (ie, the amount of TSLA he'd need to sell to cover his end of the deal). His lenders couldn't "independently verify" the mDAU, because he waived diligence --- he was entitled to information as a contractual technicality, but he was not entitled to condition the deal based on anything contained in that information, short of a "material adverse effect", which is in practice an impossible bar to clear.

danielmarkbruce9• 4 years ago

It does have something to do with accuracy, because further down the page the letter explicitly calls out the SEC filings and the 5% number and the fact that it was a rep and that there is an MAE.

The letter is throwing several pieces of shit against the wall and seeing which will stick.

JamesSwift7• 4 years ago

Twitter is supposedly not providing the data

Not really. Reading the letter it sounds more like Musk has started to make more specific requests, likely in the hopes of them not being able to service them. For example, he claims in the letter that he requested daily mDAU numbers for the previous 8 quarters (i.e. 2 years) and they only gave him rolled-up numbers.

I find it completely believable that they may not have a daily breakdown for 8 quarters, and so they can't provide the information requested.

Lazare5• 4 years ago

I have little doubt anyone lending that kind of money would require the buyer to independently verify the mDAU.

Nope. Musk's financing is not conditional on that.

rocqua10• 4 years ago

"For any reasonable business purpose" is different from 'any information you think is reasonable'. I would presume (guess) that Musk kept asking for more info until he found a point where Twitter stopped responding just so he could argue this clause was broken.

hackernewds3• 4 years ago

He's a great deal maker. But his ego, need for attention and celebrity, legitimate Twitter addiction undermines him.

StopHammoTime2• 4 years ago

During a merger, discovery is absolutely a right the purchasing side has. The target company should open its books, your assumption about them not disclosing is incorrect.

HillRat• 4 years ago

The problem for Musk is that he filed an offer letter, which is normally what you do after due-dil, and there’s nothing in that offer that gives him a way out without pulling the MAE card, which is a pretty weak reed to rely on (though his most recent filing gamely works as many angles as possible, as you’d expect from Skadden).

The buyout offer was a ridiculous move that feels like it was predicated on hurt feelings over the board debacle, but it’s not the Chancery Court’s job to protect billionaires from themselves, and Musk is generally the sort of manager that the court casts as the bad guy in the little morality plays they make of cases. Doesn’t mean they’ll compel specific performance (I’m skeptical that an equity court is going to see that as the best option, not least because it’s not clear to me Musk would have enough cash to operate the company if the sale went through under current market conditions), but I suspect that, after protracted negotiations and litigation, either the board will accept a modest haircut on the offer (again, due to market conditions), or the court will award liquidated damages ($1bn) plus possibly some additional damages if Twitter wants to argue that Musk violated the confidentiality and nondisparagement provisions of the deal. (If the former, I suspect that we’ll see a bunch of strike suits from aggrieved shareholders land in court anyway, so buckle up for a lot of litigation regardless.)

thelamest• 4 years ago

No it’s not. See e.g. https://twitter.com/matt_levine/status/1545152093501227009, https://twitter.com/MorganRicks1/status/1545404990457536512. In what meaning are you even using the term?

StopHammoTime2• 4 years ago

You guys are right, I completely missed that he waived his rights on this term. My apologies, I made an assumption (which was wrong) that Musk was acting reasonably.

random3142• 4 years ago

I have enormous respect for his engineering

He has never demonstrated engineering skills. He has always been a business manager. But with all of the business comedy he has performed this year, I am beginning to doubt his business skills too. Perhaps it's the VPs under him who managed the business well, while Elon remained the PR front person and primary investor. Much like SpaceX.

simondotau2• 4 years ago

Elon Musk is literally the Chief Engineer at SpaceX. His technical proficiency is validated by other senior engineers who work there, as well as senior engineers at NASA. There are also countless hours of unedited footage of him demonstrating his deep technical understanding of rocket engineering.

https://www.reddit.com/r/SpaceXLounge/comments/k1e0ta/eviden...

https://www.youtube.com/watch?v=hIPLmZK3C1Y

notyourwork3• 4 years ago

have enormous respect for his engineering and business skills

I don’t

Abishek_Muthian2• 4 years ago

Complaining Twitter rate-limited his API access (which would be very foolish on their part)

I have recently built a Twitter application with the new V2 API. They do have undocumented API rate limits[1] while the developer documentation says something else[2].

And if you see the discussions at Twitter developer forum, It takes a while for the Twitter representative to find that the issue is because of the undocumented rate limit because it's somewhere deeply integrated into their system(But still wouldn't update the official docs). Besides the Twitter rate limit covers every Twitter application used by the user incl. their official Twitter clients.

So I wouldn't be surprised if they gave Musk a privileged API token but forgot to whitelist it against their hidden, obscure rate limits; Of course this could have been noticed early on Musk's side and it's possible that they chose to attribute it to malice.

[1] https://twittercommunity.com/t/undocumented-twitter-list-rat...

[2] https://developer.twitter.com/en/docs/twitter-api/rate-limit...

jacquesm14• 4 years ago

Then they could have simply communicated that fact the first time they ran into the limits and they certainly would have been lifted. This happens to me during DD all the time and it has never caused a problem or an investor/acquirer to back out of the deal.

seanhunter• 4 years ago

I agree with your analysis. This has always seemed a situation driven by ego rather than rational thought and I expect ego will prevail and we will see futile legal + PR trench warfare for a while. However, my understanding of M&A law[1] is it's not enough for him to say that the numbers are missing or even wrong. He has to say that there was a material breach caused by the fact that the numbers were missing or wrong.

So if you say "I went into this deal thinking twitter had no bots and OMFGBBQ there are bots" then twitter are going to say "look at our numerous filings on bots and why not actually go on twitter at all you can see there are bots" and therefore no material breach. He has to show somehow that the failure to provide him with complete and accurate information somehow makes the deal materially worse than he could reasonably have thought going in. And that's pretty hard to prove. I believe Delaware has been very reluctant to find material breach in these sorts of circumstances. (eg even if he was to somehow prove that the bot problem was 100x worse than twitter's public statements I'm not sure that would be sufficient to prove an actual material breach given the difference in ad revenue between "lots of bots" and "hella bots all over the place" is probably not material and he knew the revenue number going in).

My expectation is he wants to make it painful enough for them in court and on social media to drop the breakup fee but they have seen for ages that he was likely to attempt this and would be sued to hell and back by other shareholders if they drop the fee and therefore will strap themselves in for a fight.

[1] I'm definitely not a lawyer but I have been involved in a few M&A situations and have been advised on this kind of thing by pretty good lawyers a couple of times.

afterburner2• 4 years ago

The podcast Opening Arguments had two great episodes about the legal details of this deal (note the first episode doubting this deal would go through was from 2 months ago):

July 4th: https://openargs.com/oa610-elons-twitter-deal-was-a-complete...

May 12: https://openargs.com/oa595-shareholders-sue-twitter-alleged-...

prox2• 4 years ago

So basically it’s like buying a house and finding faults with it that the seller had hidden?

lifeisstillgood• 4 years ago

OK I know this is a massive tangent but I have to ...

OMFGBBQ ?

Oh My F&&&&ing God Bar-B-Q ?

fortran772• 4 years ago

I agree with your analysis, but I also think the numbers are bogus. Just for fun I tried buying half a million followers from some Russian guy a 7 years ago. While that number declined a bit over the years as Twitter did some trimming, I still have half of them.

(Interesting some of the followers were "real" in that these were people who installed a program that ostensibly would tell them who recently followed or unfollowed them, but the program would also add followers they didn't know about. I saw many comments like "I opened twitter and for some reason I'm following 100 more people! WTF?") ... but about half of the paid followers seemed like bots.

Lazare5• 4 years ago

That's an interesting story, but irrelevant to this.

Twitter claims that < 5% of their "monetisable daily active users" (aka mDAU) zfd bots, where mDAU is a very specifically defined term, but broadly represents "people that Twitter thinks they can count when they sell advertising". Bots don't tend to buy things, so any bots counted in mDAU is a mistake that will piss off advertisers. (Which would be bad for Twitter, hence why the number matters.)

That there are a lot of bots on Twitter is well known, and clearly true. That Twitter happily leaves most of them alone to do their own thing as long as they don't abuse the service is also well known, and quite sensible.

The question is whether Twitter is good about flagging them as bots. You could have a million bots following you, but as long as Twitter has correctly noted them as bots and not counted them as mDAU, then exactly 0 count as part of the 5% bots.

Nobody outside of Twitter knows who they are counting as part of their mDAU, which means nobody can cross check their numbers.

rbreaves• 4 years ago

I think many of you guys are missing the forrest from the trees here. He tanked his Tesla shares to do this deal & to no small part due to Bill Gates. I am sure this express more of his nervousness on just how much more expensive this deal was becoming as it was costing him a lot more than the list price due to him not taking into account how his other investors in his other companies would take the news.

He's a smart idiot to put it kindly and a very lucky one at that despite all of his sincere and actual efforts.

DoesntMatter223• 4 years ago

What you are saying doesn't even make any sense. He tanked his Tesla shares and it's partly because of Bill Gates? Makes no sense.

cloutchaser4• 4 years ago

I don't agree with the Bill gates part but you are fundamentally right.

Elon signed this deal before the biggest stock market crash for about 15 years. The deal is extremely expensive for him right now in terms of tesla shares.

He is just buying time and hoping tesla shares increase in the meantime.

He KNOWS he HAS to complete this deal legally.

That's it. It's not complicated.

imdsm2• 4 years ago

mDAU being monetizable daily active users for those who are wondering

hef1989817• 4 years ago

The m seems to be key, if a bot can be mobetized that bot isn't a problem.

RC_ITR2• 4 years ago

It’s so crazy to me that the purchase price was determined by a weed joke and people are surprised that in the cold sober light of our recent correction, Musk is trying to get out of this.

His whole M.O. is degrading the power of the SEC and DoJ by pointing out they have very little enforcement power. This is just another example in his long journey of “what are they going to do if I just don’t follow the rules?”

Weird way for the richest man in history to live his life, but that’s probably just sour grapes on my part.

papito• 4 years ago

Musk is no different from your average "small government conservative", which basically means being anti-civilization. They won the birth lottery, and the society and the government are stopping them from going from rich to filthy rich quickly.

The only thing here is that Musk happens to be fascinated with electric cars and space travel (ever since he was a teenager). We just got lucky - he could as well have gotten into opioids or coal mining, and his desire to dismantle the laws and norms would have burned even brighter.

krisoft2• 4 years ago

people are surprised that in the cold sober light of our recent correction, Musk is trying to get out of this

People are not surprised. People were expecting this. As evidenced by the discussion then and now. Also as evidenced by the contract which was drafted at the time between him and twitter.

pavlov• 4 years ago

The last paragraph, complaining about firings and hiring freezes and departures, seems positively desperate.

This one comes across as particularly specious.

So Musk is complaining that Twitter has been failing its obligation to “conduct its business in the ordinary course” by firing some people and slowing hiring.

But there's a global slowdown going on! If Twitter hadn't taken these actions, he would be complaining about the opposite: that by not cutting costs, Twitter would be failing to conduct its business in the ordinary course in the current circumstances.

There's a reason why US courts have a very high bar for M&A buyers' cold feet. They don't want to be arbitrating this kind of ridiculous arguments.

stewartmcgown• 4 years ago

he's mostly a fraudster who has used a cult of personality and litigation to dominate the businesses that he's involved in. check out the litigation against him for the solar city purchase by Tesla if you're interested in just how much the man is willing to defraud shareholders to personally enrich himself and his family.

Lord_Zero• 4 years ago

Or maybe, and bear with me... the entire merger was in bad faith since day 1.

crmd2• 4 years ago

Temporary rate limiting on Elon’s firehouse API account[0] does not sound like a material breach of contract.

[0] - page 5 https://www.sec.gov/Archives/edgar/data/1418091/000110465922...

734129837261• 4 years ago

Out of touch billionaire realises that he has to sell quite a lot of stocks in his companies in order to buy a dying social media platform that's mostly gamed by PR firms, bots, and the occasional actual user who wonders: "Why am I here again?"

ElijahLynn• 4 years ago

So was the whole goal all along to try and figure out how much of Twitter was fake spam accounts? That would be one way of doing it.

riffic2• 4 years ago

If there's a valid combination of username and password, the account is in no way "fake". I wish there was better terminology here.

It can in certain be a spam account though.

r3trohack3r• 4 years ago

I have very little context here. It seems the general sentiment in the comments is that this attempt to get out of the merger agreement will fail and that Musk will be forced to follow through with the purchase of Twitter. At the current rate Twitter is trading at, Musk will be paying roughly 50% over market value to acquire the company.

So a question: if you believe Musk will still purchase Twitter at an inflated price, are there any good reasons for not purchasing Twitter stock? In other words, Musk has offered to give you $54.20 per share, and you can purchase those shares for $36.81 at the time of this comment. If folks are confident that this trade will go through, isn't it a quick way (relative to 8% YoY) to 1.5x your investment?

ceejayoz12• 4 years ago

There’s a chance Twitter accepts 5-10B in exchange for dropping their objections to the end of the merger.

peanuty12• 4 years ago

Why would they take a 5B settlement when they have legal grounds to force the deal through for 44B?

sjs7007• 4 years ago

Small correction, he'll be paying 50% over market value, not 150% more.

morelisp2• 4 years ago

He could be paying effectively 150% more, right now the presence of the offer is propping up the stock - we have no real idea how far Twitter might have fallen if left to its own devices.

electric_mayhem• 4 years ago

I’m looking forward to the day he gets held accountable for market manipulation.

Bet he (and his friends, if he has any) made a mint off this farce.

Not that I have any faith it will happen.

adamrezich4• 4 years ago

lots of emotionally-charged comments here, which is pretty disappointing. if we look at this dispassionately, perhaps we can come to better conclusions than "elon big poopy head freeze peach bad". for example, one possibility is that Musk never intended to actually buy Twitter because he had reasonable suspicions that the <5% spam/bot figure provided by Twitter was intentionally incorrect (i.e. fraudulent), and he just wanted to get that out in the open and possibly even tank the company's stock as a result, either as a personal vendetta against the platform and company, or because he wants to develop a competitor. or maybe he wants to buy it up after the price falls even further. who knows? but it's more fun and interesting to speculate like this rather than just hurling loaded adjectives like "impetuous", "eccentric", "breathlessly arrogant", "astonishingly careless", and so on and so forth. I get that public opinion on the guy here has largely turned pretty sharply in the past couple years but do we really need to pretend like we're 2016 headline-writers writing about Donald Trump when we discuss him for some reason? that entire schtick is long-since played out.

minimaxir5• 4 years ago

one possibility is that Musk never intended to actually buy Twitter

Which was a common perspective when the idea was floated around, until he signed a legal agreement actually saying he was going to buy Twitter.

adamrezich4• 4 years ago

sure, but now more events have unfolded, the results of which remain to be seen—so why can't we discuss the situation and speculate as to what will happen going forward without all the emotionally-loaded verbiage?

jungle2jungle10• 4 years ago

You are writing fan fiction, not observing reality.

adamrezich4• 4 years ago

please then, enlighten me to reality.

avidphantasm• 4 years ago

Was really looking forward to watching him eat this shit sandwich he made for himself.

mandeepj• 4 years ago

I’m not sure why you guys have not noticed his patterns: he always jumps-on whatever the hottest current topic is - whether kids stuck in a cave in Thailand, Ukraine war (making fun of Putin by inviting him to a fist fight), Twitter ( was active due to leadership changes; in-general the app is popular). His idea is - by staying in news, he’s driving PR for Tesla. He’s acting as a brand machine for himself and his companies.

Besides all his, he has no regard, empathy for his employees - the real people who made him, who he is. What an irony!

hartator2• 4 years ago

Everyone is saying Musk waived is due diligence rights. Where can I read that?

vitaflo2• 4 years ago

He didn’t wave them he simply didn’t do them. The time for due diligence is before you sign a binding contract. Once you sign no amount of “extra” diligence maters because you already made a binding decision. Elon signed without doing enough due diligence and now wants to get out because of it but that’s not how binding contracts work.

camjohnson2613• 4 years ago

Look up Matt Levine’s newsletter, he’s been covering the whole saga and is an expert on M&A.

jimnotgym• 4 years ago

I don't trust any man that thinks a car doesn't work better for the driver with an analogue speedo in front of the driver, rather than a tablet to the side

aalleavitch• 4 years ago

What if he's not a genius and actually he's just some guy, and his wealth is actually arbitrary.

Absolutely chilling thought, eh?

x86x873• 4 years ago

Genius is not an absolute that applies across everything one done. In fact most geniuses are very very good across one dimension + they benefit from the halo effect.

Musk can be a "genius" when it comes to electric cars and space exploration while at the same time being total wrong about almost everything else.

encryptluks29• 4 years ago

He's got that affluenza disorder.

timwaagh• 4 years ago

I hope he hangs lol. Not out of any disrespect for musks achievements like those cars or the first online payment method that did not involve a credit card but he's been doing too many disruptive unnecessary things that will have cost a lot of ordinary retail stockholders a pretty penny.

jmyeet• 4 years ago

I'm increasingly getting the sense that SpaceX is the anomaly here and otherwise Elon has been steadily failing upwards his entire life. Is that just me? Obligatory joke: this is the only time Elon has pulled out (if you know you know).

Tesla's peak market cap is ~$1.5T. It's still sitting at just under ~$800B. Tesla sold just under 1M cars last year putting one metric at (currently) $800,000 per car sold in a year.

How does any of that make sense? Just watch as traditional auto manufacturers ramp up EV production. The Ford F150 Lightning is in my mind a bellwether. From what I've seen it's been incredibly well-received and that's only the beginning. Compare that to the often ridiculed and clearly beleaguered Cybertruck.

I really wonder if Elon's attempted acquisition of Twitter is just a symptom of him becoming increasingly unhinged (eg his screeds against the "far left"). I really wonder if this hwole thing wasn't motivated by the perceived injustice (according to him) of Trump being banned in particular and the idea that conservatives are somehow being silenced.

But maybe this is 5 dimensional Chess. One can argue this hass done a lot of damage to Twitter and Elon may be on the hook for more than the $1B breakout fee (which he will of course try and weasel out of). This may actually drag on for years.

Personally I'd be happy just disappeared into a lab in a remote location where he can build rockets without distraction. I can but hope.

I honestly think the skyrocketing valuation

trixie_3• 4 years ago

PE of 90 and 2 new factories only starting to ramp up it. It makes perfect sense.

pen2l• 4 years ago

"The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery."

- Bret Taylor (https://twitter.com/btaylor/status/1545526087089696768)

Elon is on the record talking about the 'bot problem' over the years (on Twitter!). He's about to get a very expensive lesson that agreements can't be breached even if you have more money than sense to spend on litigation and you can't just say stuff willy-nilly, because it can come back to bite you sometimes.

bindle89325• 4 years ago

Please, let the man walk away from the deal. We do not want the world's richest man controlling his own propaganda system.

yalogin• 4 years ago

This was never in doubt. He made a foolish decision to buy Twitter with his stock and then immediately regretted it the moment the stock market tanked. Tesla itself went down by a lot and it made it almost impossible for him to finance it. He wanted out and made up reasons. Twitter will try to enforce the purchase agreement. It will be interesting to follow this case.

fma• 4 years ago

If you look at Twitter's stock price, it never stayed near his $54.20 offer price, unlike other actual legitimate offers for buyouts.

Anyone who took it seriously...I'd like to sell them a bridge.

crikeyjoe3• 4 years ago

Read the reason. Twitter is all fake bots. You gotta be nuts to own that.

leroy_masochist• 4 years ago

So he does know how to pull out...

swlkr• 4 years ago

I wonder if similar to dogecoin, bitcoin, and hyper loop before it, if this was just marketing

andirk• 4 years ago

Trolling can be fun and funny, but when he does it, his fanboi army hears it as gospel and local and national news outlets run with that tabloid garbage.

crikeyjoe3• 4 years ago

Too many bots. Kind of like the boy brigade here.

AzzieElbab• 4 years ago

This was the first time I bet against musk and it is paying off

LAC-Tech3• 4 years ago

Probably for the best.

The only way I was going back to twitter was if Musk took over, took decisive action, and it stopped being a left wing echo-chamber.

But wasting more of my life on social media is not a net positive.

So overall I'm glad, I can continue to ignore twitter exists except when people occasionally link a tweet (which half the time I regret clicking anyway).

jungle2jungle10• 4 years ago

So you want to give the richest man in the world more control over the flow of information?

I've always though it better to avoid massive concentrations of power, but that's just me.

LAC-Tech3• 4 years ago

I mean there's no point me joining a platform like twitter where I'm plainly not welcome. Musk might have changed that.

remflight6• 4 years ago

Twitter can’t give Musk the data he needs to determine fake accounts. It’s obvious that while Twitter does some work to detect fake accounts, they probably only go after low hanging fruit. Twitter is balancing investment costs vs impact to the platform and obviously they are coming in light. Everyone that uses Twitter knows it has a bot problem.

If Musk’s team does a deeper dive than Twitter is willing to invest in and determines that the number of bots is material, it calls into question the entire financial model of Twitter. Customers will demand refunds and earnings will have to be restated going back years. It’s going to be a nuclear financial bomb.

So of course Twitter is going to sandbag. They can’t afford to release that data because they know it’s going to be material. Musk knows this and Twitter knows this.

I think Twitter is actually fucked now because their number of accounts will come into question and maybe even the SEC might squeeze them. But Twitter will probably look tough but try to close this chapter as quickly as possible and hope that no one digs deeper into the fake accounts.

ceejayoz12• 4 years ago

Everyone that uses Twitter knows it has a bot problem.

Which is precisely the problem with signing a "I'm buying you for $44B" and then claiming you had no idea they had so many bots to back out of it.

remflight6• 4 years ago

Your argument doesn’t hold water. You can have a sense of the amount of bots but if it’s wildly off, then of course it’s going to be shocking.

iudqnolq2• 4 years ago

If Musk’s team does a deeper dive than Twitter is willing to invest in and determines that the number of bots is material, it calls into question the entire financial model of Twitter. Customers will demand refunds and earnings will have to be restated going back years. It’s going to be a nuclear financial bomb.

This doesn't make sense. "Material" is a term of art defined with regard to the current deal, there's no such thing as determining "the number of bots is material" in a general sense such that customers (I presume you mean advertisers) would automatically be allowed to sue.

Sure, if Musk finds Twitter has historically lied that would be significant. But Twitter doesn't have a single "bot number". In specific circumstances they make specific calculations using defined procedures. For example, the number Musk is whining about uses active - not all - users as the denominator, so of course it's going to be lower than the "real" number of bots.

Surprisingly to me, so far Musk hasn't provided an argument beyond this same sort of word salad. Maybe he's playing n-dimensional chess, but if Twitter sues him he'll presumably have to make his real secret arguments in open court. We'll see then.

remflight6• 4 years ago

Of course it makes sense. “Material” is a financial term that is used all the time. It’s not a surprising term at all and fits here.

Twitter doesn’t have to be caught in a lie. They can just be caught with having a materially different numbers of fake accounts from their stated numbers.

If 25% of the amount you paid to Twitter for ads went to bots and fake accounts, you don’t think that you deserve a refund? You don’t think advertisers would take advantage of that to get refunds? You don’t think the SEC would be interested in this?

The whole point is Musk’s team is going to dig up stuff that Twitter won’t want to fix because the cost to find and track it will overweigh the amount of money they make probably. But it will have ramifications in terms of things like refunds and customers leaving the platform entirely. It will make them look really bad. It’s inevitable.

phailhaus• 4 years ago

Twitter can’t give Musk the data he needs to determine fake accounts.

Twitter has already given Musk access to the "firehose of data". [1]

Musk bragged about buying Twitter because of the bots. Nobody is going to believe that he suddenly cares now that there are too many, not after he waived due diligence and set the buying price as a 420 joke.

[1] https://www.wired.com/story/elon-musk-twitter-firehose/

remflight6• 4 years ago

Read the letter from the lawyers. They gave Musk’s team limited access via api until a couple of days ago despite asking for it since may. The limited access was rate limited and had other restrictions. It’s obvious that with a rate limit the amount of data is not enough to do what they need to do.

social_quotient• 4 years ago

It seems more productive to take this at face value vs conjecture and rumors…

Suppose the filing is true - all of it. Let’s start the conversation with that and see what people think and what happens next to Twitter.

alfor• 4 years ago

Elon is pretty straightforward.

The deal is obviously not worth it if a sizable chunk of user are fake.

His first action would be to get rid of fake account and doing so decrease the value of Twitter for him and everyone that join him.

It’s better if the value decrease now to reflect reality, then buy at a far price and improve from that point.

I think the deal might go own at a much lower price. The lying is going to get out, the value of Twitter will then have to be evaluate at the current economic level.

WORMS_EAT_WORMS4• 4 years ago

The bigger story (if you can get past the juicy Elon-a-drama)… is

Twitter stinks.

You can smell the <insert_elon_poop_emoji> in their ad program a mile away and it’s finally free game to call out.

I remember buying Facebook ads once and I got more likes than God and not a single one of them seemed like they were “real”. Maybe they were “mDAU real” or whatever…

These company’s are liars and have been ripping people, small and big business off for years.

Google ads, search ads, Twitter, Facebook, Snap, TT, Reddit, Yelp, etc… it’s all stretched fake engagement. We all know it and have known it for years — if you’ll admit it or not.

colechristensen2• 4 years ago

I promoted a tweet just for curiosity and a significant portion of the engagement was spammy.

A lot of likes from accounts selling some kind of sex work, some really blatant spam, a lot of small time self promotion from wannabe influencers. Much of this was probably “real people” but also “spam”. There is a spectrum of what is and is not “real” usage vs spam, but if I were advertising for real, I wouldn’t want to target the Twitter account representing a furry onlyfans creator. Of those there were several in the few hours and ~$100 I left the tweet up.

In other words a significant part of the engagement in my promoted tweet was low quality Twitter accounts engaging with my tweet in order to get more attention for themselves.

WORMS_EAT_WORMS4• 4 years ago

Does anyone here actually believe Twitter doesn’t know this and have exact metrics down to a science?

Or those stock options and gains too big to have any real morals?

djcannabiz• 4 years ago

very excited to read what Mat Levine has to say about this...

p2pai• 4 years ago

What is most surprising about this, is that he had built up a significant percent ownership before the offer.

paulpauper• 4 years ago

lol

Ms. Gadde:

sounds like William Gaddis, one of whose novels involves fictitious lawsuits

justinzollars2• 4 years ago

The Hacker News community has really turned into an angry mob over the years! Wow. So much Elon Hate - he made the Electric Car, He makes Rockets. Give the dude a break. I know its hard to live up to your personal standard of Piety/Orthodoxy - but realize some people are producing things.

This is an example of a recent Trend:

https://twitter.com/search?q=%22Jared%20Kushner%22&src=trend...

Click on the top 10 accounts. None are real people. Likely CCP Army, or Russian trolls, bots of some type - but certainly not users who should be counted as mDAUs.

jungle2jungle10• 4 years ago

Quick, call Elon's lawyers! You have incontrovertible proof!

justinzollars2• 4 years ago

Proof? Legal Discovery will force the burden of proof on Twitter.

plaguepilled• 4 years ago

Musk does yet another brazenly out of pocket thing and forces the world to look at him. Yawn.

kragen2• 4 years ago

A thing I'm confused about here is how Twitter's stock price is still US$35.04 in after-hours trading, amounting to a market cap of US$28.13B. This valuation implies a time-discounted long-term expectation that Twitter will earn about US$1.4 billion per year, if we divide by a nominal P/E ratio of 20 years. Alternatively it represents about a 70% probability that Musk will acquire the company for the agreed-upon US$54.20 per share, or that some other similar acquisition will happen.

Twitter is a somewhat stagnant social networking service; it hasn't been experiencing the meteoric growth of things like Instagram or TikTok. Its yearly revenues are US$5.1B, but instead of earning US$1.4B per year, it's losing US$220M per year, so it's spending US$5.3B per year (on 229 million "mDAUs" ("monetizable daily active users"), so that's US$23 per user per year). I think most of its 7500 employees are high-paid tech employees, who cost maybe US$300k per year each—including benefits, remember, having an employee typically costs about twice their salary. That works out to US$2.25B per year of employee-having costs, leaving about US$3.0B for everything else.

Large profit margins are common at social networking services; Meta makes US$39.37 billion of net income on US$117.929 billion of revenue, a 33% profit margin.

So, what's Twitter's path to earning US$1.4 billion per year? Either it could increase its revenues by at least US$1.6 billion, for example by growing its user base by 40%, without increasing its expenses much; or it could decrease its expenses by at least US$1.6 billion, for example by laying off most of its employees, without reducing its revenues much.

A dramatic expansion of Twitter's business in the next few years doesn't seem likely to me; is that what investors are betting on? Looking at https://en.wikipedia.org/w/index.php?title=Twitter&oldid=793... they had 319 million active users in 02016, so the crudest approximation suggests that their yearly growth rate is -6.5% per year. At that rate, growing their user base by the requisite 40% will take them another negative five years. (More charitably, maybe they are in fact growing, but mDAUs are a small enough subset of what they were reporting as "active users" in 02016 that it more than makes up the difference—but their yearly growth rate still isn't likely much more than +6.5%.) Alternatively they could get better at squeezing money out of their existing users. Or maybe they could buy another Vine and this time not shut it down so that a Chinese clone becomes the hottest new social networking app. But that would require them to have money to fund the acquisition, and where is that going to come from? Or are the founders of the hot new startup going to accept Twitter stock?

More plausible is a skeleton-crew Twitter with a 20% smaller userbase and US$4.2 billion of yearly revenue spending only US$2.8 billion—depending on what its actual expenses are. But getting from here to there would be very traumatic and poses a substantial risk of total collapse, either because Twitter loses the institutional knowledge of how to keep the site running when it lays off most of its staff, or because their cuts send them into a death spiral where revenues decline even more than expenses.

It's against this background that, somehow, Musk's trolling with this merger termination has only dropped Twitter's market cap by 4.8% today.

So, how are Twitter's remaining investors justifying their US$28 billion bet on Twitter? In this situation I can easily imagine Twitter being worth US$6B or maybe US$10B, but US$28B, the hell?

Are they figuring that there's a 35% chance that a Delaware court will order specific performance of the Twitter acquisition (and that someone will lend Musk the money to go through with it, despite his best efforts to convince everyone that Twitter is a massive fraud?) and a 50% chance that, failing that, Twitter will successfully make the transition to a skeleton-crew shadow of its former self that nevertheless knocks out Facebook-like earnings every year?

Do they think Twitter's management team will miraculously figure out how to leverage their evident ability to get a moronic clown elected President of the USA into actual profits?

Do they think another acquirer willing to pay a premium over today's price will materialize, perhaps motivated by the prospect of political influence rather than selling colored water to the Twits, if that's what Twitter users are called?

Here's the most plausible hypothesis I've seen. TSLA's market cap is US$779.67B (https://www.google.com/finance/quote/TSLA:NASDAQ?window=5Y), so the US$44B purchase price would be about 5.6% of TSLA's outstanding stock, about 58 million shares. The trading volume is 31 million shares per day, so Musk could presumably liquidate 58 million shares over the course of a few weeks without totally tanking the stock, and so could any potential lender who gave him a cash loan secured by that stock. Musk's net worth was reported as over US$300 billion in November (https://en.wikipedia.org/wiki/Elon_Musk#Wealth), three-quarters of which is Tesla stock and stock-price-related instruments such as purchase warrants. Tesla has fallen 38% since then, so he must still have at least US$180 billion worth of TSLA.

So, the Twitter investors are betting that there's an excellent chance that the court will in fact order specific performance and the deal will go through despite Musk's most eloquent protests of fraud on the part of Twitter's current management team.

FireBeyond5• 4 years ago

So, how are Twitter's remaining investors justifying their US$28 billion bet on Twitter? In this situation I can easily imagine Twitter being worth US$6B or maybe US$10B, but US$28B, the hell?
TSLA's market cap is US$779.67B

I'd love to see plausible and realistic justifications that Tesla's market cap is worth more than every other car company in existence combined.

Some vague hope that one year, Musk's annual "FSD. This year. For real this time." will come true?

Robotaxis?

It's certainly not their horrific approach to service and quality.

kragen2• 4 years ago

It's an interesting question, but for the purpose of this discussion, it doesn't really matter whether Tesla's market cap is so high because Tesla's investors are deluded fools or because Tesla will really have over US$40 billion a year in profits someday soon, like Apple, Saudi Aramco, ICBC, Alphabet, Berkshire Hathaway, JPMorgan Chase, Microsoft, and I think no other companies in the history of the world. (I'm looking at https://en.wikipedia.org/wiki/List_of_largest_companies_by_r....)

What matters is how much Tesla's investors would change their minds if Elon, or his lender, unloaded 5% of the company's stock on the market. How much would the stock price move? Would Elon's paper wealth evaporate, leaving him unable to follow through on the Twitter offer? Since 5% of TSLA is less than two days of market volume, I think the answer is that the price would move very little, and so he would be able to complete the acquisition.

gfodor• 4 years ago

The market crashed to hell and it makes no sense to close on a ~50% markup when the penalty is at most $1B. It seems kind of obvious to me he’s angling to get a nice discount and close, since he has almost all the leverage (the shareholders are going to sue the board if they end up having their stock directly exposed to the radioactive hellscape that is the equities market.)

danielmarkbruce9• 4 years ago

This is all wrong. The penalty is at most $44 bill. Maybe more.

Hasu4• 4 years ago

when the penalty is at most $1B

This isn't correct. People keep saying this, but it's not true. $1B is the penalty if Musk can't get financing. He has financing. He has no escape clause now, and this is a transparent and frankly pathetically weak attempt to get out of the deal. If he gets out at all, it will be at a much higher price than $1B.

It seems kind of obvious to me he’s angling to get a nice discount and close, since he has almost all the leverage

He really doesn't. He signed a binding agreement to purchase Twitter at $54.20/share and none of the excuses he put in this termination notice hold water. The Twitter board has every right and incentive to sue him for specific performance and that's exactly what they're doing. They are in the legal right and have a great chance of winning.

lettergram2• 4 years ago

His financiers were the ones requesting validation. At this point it appears they pulled financing as the conditions weren’t met.

roflyear8• 4 years ago

That's musk's fault. He signed a contract.

MichaelMoser1233• 4 years ago

Musk would have been a political player, as the owner of twitter. That could have gotten him into a fight with the wrong people, and could have hurt his business.

I mean AWS didn't get the big pentagon contract, under the previous US president. Mr. Besos was very upset about this. Now Musk is much more exposed to that kind of thing, as SpaceX is a major Nasa contractor.

There must be some politics here, if you consider the amount of tax money being involved. Now the politics of Mr. Musk doesn't quite align with that of the president, and we saw some spats between them in the past. I would argue that this would have a potential for escalation and would have much more weight than the bot issue on twitter.

'Biden wishes Elon Musk "lots of luck" on moon trip' - could be read as a kind of veiled threat. https://www.youtube.com/watch?v=igSyBMYus5A

MSNBC says that Musk and Biden are in a kind of fight now https://www.youtube.com/watch?v=Fgj2jfmPfRE

MichaelMoser1233• 4 years ago

wow, once upon a time you could have a discussion here on any topic, hope that feature is not disappearing....

AussieWog93• 4 years ago

You were downvoted because your comment about the veiled threat from Biden is a pretty crazy conspiracy theory.

imwillofficial• 4 years ago

Something tells me this ride isn’t over yet…

causality0• 4 years ago

I'm surprised anybody thought this was actually going to happen. From day one this had all the trappings of a typical Musk publicity stunt.

0xakhil• 4 years ago

Okay, plot twist. Musk never intended to buy twitter. Whole ploy was to get access to twitter’s firehose of data to train his AI.

On the serious side, I can’t believe someone would gamble with half of his net worth. But this is Musk!

vincentmarle• 4 years ago

Musk’s account keeps getting suspended/unsuspended in the past hour: https://twitter.com/growing_daniel/status/154562588715182080...

KJKingJ• 4 years ago

Not quite - the screenshots being circulated show an account with a different name that visually looks quite similar. Instead of a lowercase `l`, the suspended account has an uppercase `I`. In many fonts, these end up looking quite similar.

phendrenad2• 4 years ago

This is going to end with Elon a lot poorer, and Twitter owning a large chunk of Tesla stock, isn't it?

CogitoCogito19• 4 years ago

If I were Twitter, the last thing I would accept is Tesla stock when what I really was owed is cash.

cat_plus_plus• 4 years ago

Too bad, I was looking forward to a social network run differently while still being able to provide strong security and take down illegal / pointlessly obnoxious content. Twitter combine with Musk's wealth would have been able to do that. I guess the upside is that upstarts like MeWe now have more chance to take on established players who have grown condescending to their own users.

cjbgkagh2• 4 years ago

It’s been amusing to see the flip from people saying Musk can’t buy Twitter to Musk must buy Twitter.

Buying Twitter the way Musk did right before the most telegraphed recession in modern history was colossal stupidity. I have no insight to Musks liquidity, but if Twitter is able to force him to complete the sale in the middle of a raging recession then how much of his empire would be diminished by forced liquidations. And was this decision made so he could promote Shivon to CEO of Twitter? That could make it the most expensive (including the cascade of losses due to liquidation) gift to a mistress (?) in human history.

But Musk has a habit of escaping justice (see ‘pedo’ case which was egregious) and I have a feeling there would be little appetite to damage his empire due to the job losses it would cause, especially in a recession.

diob3• 4 years ago

Why would it cause job losses? Wouldn't others be able to hire due to the money transferring to them?

cjbgkagh2• 4 years ago

Theoretically yes, but that’s not how courts view it.

orlp• 4 years ago

Trickle-down economics has consistently shown to be a failed hypothesis.

postmeta2• 4 years ago

What happened to the poison pill strategy to keep him from buying it?

scoopertrooper• 4 years ago

A moderate breeze came along and the Twitter board gave up on it after about an hour.

Etheryte• 4 years ago

The point of a poison pill isn't to prevent a takeover, it's to prevent a _hostile_ takeover. It's standard practice and once you've ensured the takeover will be fair to all shareholders, as is your duty as the board, there's no more need for it.

femiagbabiaka3• 4 years ago

I have enormous respect for his engineering and business skills, he's accomplished some remarkable things. But he doesn't seem so great as a dealmaker. Perhaps he's badly advised, but hey, he chose his advisors.

There’s no evidence that he’s a good engineer or a good businessman, save if committing fraud or stealing the accomplishments of others is in the list of things that qualifies one of either. It’s beyond time to start taking his actions present and historical seriously instead of feeding into his cult of ego.

gzer0• 4 years ago

https://www.britannica.com/biography/Elon-Musk

femiagbabiaka3• 4 years ago

save if committing fraud or stealing the accomplishments of others

rocqua10• 4 years ago

SpaceX is actually doing great things. Tesla was very innovative 5 years ago.

These two, especially spaceX, are quite impressive.

femiagbabiaka3• 4 years ago

Tesla is stolen and only saw success because of endless amount of government subsidies and a tremendous amount of fraud on Musk’s part and SpaceX was a shitshow until he went hands off.

taberiand• 4 years ago

There's a reasonable argument that these great things are despite Musk, not due to him.

dang2• 4 years ago

We detached this flamewar tangent from https://news.ycombinator.com/item?id=32028410.

Please see https://news.ycombinator.com/item?id=32039467.

Terry_Roll• 4 years ago

So I load up on some stocks, I have a massive cult following, let it be known I'm going to buy the company, stocks rise, I sell them for a profit then load up on some shorts and cite an impossible to prove reason why I could not go through with the purchase, stocks fall, I profit again.

Perfectly legal process only accessible to the very rich in which to further consolidate their position of being the very rich. Nobody else on this planet could pull this off as they dont have a cult following. Cult's dont have to be religious, unless money is a religion?

Is anyone surprised?

wnevets• 4 years ago

Is it just me or is Musk constantly finding himself in the middle of failed and shady deals?

gigatexal• 4 years ago

As soon as Tesla’s stock started falling I knew this wasn’t going to happen. But from everything I’ve read the agreement is iron clad, Elon waived diligence, and he’s on the hook for 45B.

If I were Twitter I’d take my chances in court to sue him for everything I’m owed, the full 45B or something really close to it. At least they’re due the breakup fee. Maybe they can 10x that for breach of contract.

If this does go to court and the outcome is that the agreement is thrown out or something like that it will severely undermine the legally-binding nature of contracts and have all sorts of ramifications.

greenie_beans• 4 years ago

this website needs to be renamed to conjecture.com

ckastner2• 4 years ago

It's somewhat hilarious to think that even if Twitter were to settle modestly for $5bn, that would be more than double of all profit that Twitter has ever generated as a company.

nolok4• 4 years ago

In a way, Twitter played Musk's ego to perfection and he didn't see it until its too late. In fact I'm not sure he even admits it to himself yet.

encryptluks29• 4 years ago

Musk played everyone. I called it as soon as it was announced that he was just manipulating the markets. Hopefully SEC actually does something for once.

jlarocco• 4 years ago

I love the irony that Musk wants to buy Twitter and force it to promote "free speech", but is also worried about "fake" accounts.

If I want to run a thousand bots spouting fake news, isn't that my freedom of speech in action?

SergeAx• 4 years ago

Okay, if everyone is posting conspiracy theories - here's mine. Musk did this for people to stop clamouring about his alleged twins with that blue-eyed smarty from Neuralink.

peanuty12• 4 years ago

Don't forget the SpaceX flight attendant he exposed his penis to and propositioned for sexual acts.

hackerlight• 4 years ago

Allegedly. It's shameful that people throw around unproven claims on social media like this, and in their second breath will complain about disinformation coming from people they don't like.

partloyaldemon2• 4 years ago

Chancery courts will compel performance of this transaction absent a showing of an material adverse advent. Very, very high bar. The buyer is a highly sophisticated investor and the grounds that he is alleging form the basis of the breach of contract were and are public information that has not materially changed nor been alleged to have materially changed since the signing of the merger agreement. Moreover, and most critically, it is not being alleged that spam accounts have any substantial impact on the earnings of Twitter. Thus, the courts will obligate Musk to buy the business as he agreed to in April.

stingraycharles4• 4 years ago

I actually have experience with this type of stuff, some business tried to acquire mine and kept postponing, and ended up with some excuse that there wasn’t enough technical design documentation, which would be a real-breaker. It wasn’t super big money, but also not small (high 6-figures).

I ended up suing them, won on all counts, and the deal had to go through.

Unfortunately, this company simply refused to do that even after the judge ruled against them, and I had to renegotiate the terms set by the judge.

That was one hell of a ride.

Point being, if Musk really doesn’t want it, even if Twitter wins a lawsuit, Musk will probably find another way to postpone or renegotiate or whatever. In the meantime, Twitter is not in a good shape, and this whole thing is probably hurting them so much more than that they could possibly benefit from.

synu• 4 years ago

What happened when they ignore dthe order from the judge? Nothing?

giansegato• 4 years ago

How could they refuse after being compelled by a court ruling? Did they appeal / sue you back? Can't see how they could simply say... "no".

martin84123• 4 years ago

Difference being, Twitter has deep pockets and are highly motivated to see this through.

baxtr• 4 years ago

Re twitter: What a waste of life time and resources that could be otherwise have been used. All for what? For the ego of a madman?

rvnx• 4 years ago

Why would you force someone to buy something they don't want, whatever the reason is ? If they decided not to proceed to the deal it means it was a bad deal from their perspective or that it would put them in a worse situation. Essentially you are taking advantage of them by forcing them. It's like if you sell a very expensive "brown ice cream", the buyer tells you he wants to buy it, and then when the buyer has it in hands they realize it's not chocolate and you say: "but it's brown ice cream, you are forced to buy it now"

t_mann4• 4 years ago

Sounds like a very unpleasant experience, sorry to hear. But I'm not sure it's a good precedent for this case, for two reasons:

a) You were happy to settle, which sounds understandable. But when the stakes are $44bn and most actors on Twitter's side are but agents for Twitter shareholders, their chief concern will be not breaking their fiduciary duties if they accept anything less than the maximum amount they could get. It's a bit hard to imagine how the legal bills for seeing this through could stack up to even .1% of the purchase price ($440m), and that's nowhere close to the discount that Musk will be looking for (with good reason imho, btw).

b) In your case the other party might have gotten away with dodging a court order to pay (or at least made it appear like that). That's pretty much unfathomable if you are literally the richest man on earth and live in the US.

throwaway_2341• 4 years ago

< Twitter is not in a good shape

It appears they will make around $6B in annual revenues, I think their financial performance is better than most social media platforms, save FB. In what way, Twitter is not in good shape?

trident5000• 4 years ago

The CEO has a massive parachute. Its in his best interest to just settle on a lower price rather than get tied up in courts for years with Musk. If the markets continue to decline, a lower offer is going to look more and more attractive to shareholders. Just my 2 cents.

suzzer993• 4 years ago

Do they always have the option of settling at any point in the process? Like if Musk said "$20 billion penalty but I don't buy the company", I assume they'd say yes? (Or substitute a bigger number if not.)

So are they just negotiating at this point if Musk has a penalty number he's willing to pay?

jonathankoren• 4 years ago

Twitter and Musk already agreed to a 1 billion dollar penalty. He’s trying to get out of it, even though he already waved due diligence.

ergocoder8• 4 years ago

My bet is on this.

They will just negotiate. Nobody wants to go through a lengthy legal process.

I think the number will be at 5b. Because, at 5b, Twitter gets a 1y revenue for virtually no cost. Twitter doesn't want to sell to a buyer who doesn't actually want to buy. It's not good for anyone.

Imagine Musk buying Twitter and starting open up exec emails knowing about the bot numbers being inaccurate.

JumpCrisscross5• 4 years ago

A feature of modern finance is the blockbuster leveraged buyout signed right before the market crashes: RJR Nabisco in 1989, Hilton and Harrah's in 2006. Now Twitter, in 2022.

hef1989817• 4 years ago

Porsche and VW in 2008 if memory serves well. Almost ruined Porsche. Or Schaeffler and Conti, which almost ruined Schaeffler, a private company at the time.

brown9-2• 4 years ago

This seems like a great example of selection bias if there are blockbuster acquisitions every year.

postmeta2• 4 years ago

Twitter even admitted to overcounting its users: https://techcrunch.com/2022/04/28/twitter-says-it-overcounte...

bagels• 4 years ago

By 1%, and they corrected it?

colinmhayes4• 4 years ago

Doesn’t matter, courts won’t rule that a materially adverse effect

cloutchaser4• 4 years ago

I don't think Elon is trying to get out of it, he's got 2 goals:

1. Buy more time until stock market (i.e. Tesla shares) recover 2. Renegotiate the price

Either one will probably mean he goes through with the deal. If he is under litigation for a year so be it, once the stock market recovers he's sacrificing a lot less of tesla to buy it.

It's a big IF though. If the US recession gets really bad and the Fed stops interest rate hikes, the market could recover very quickly. But equally if Powell wants to go the Volcker route, Elon is fucked probably, the market won't recover for years.

And in the meantime Elon's reputation I think is taking a massive hit. And I think a lot of his new political allies on the free speech side will be extremely disappointed. He might end up with no friends on either side.

So he is taking a big risk here.

hansword4• 4 years ago

buy more time until Tesla shares recover

The problem is that Tesla is massively over-inflated and Musk knows it and many people believe that was actually the reason for the whole twitter thing (Musk converting overinflated Tesla shares to fair-market value Twitter shares). With Tesla very likely losing the 'biggest EV maker' title to Volkswagen by the end of the year, it here has to be some sleight-of-musk for TSLA to recover.

oxff• 4 years ago

This is going to be one of those HN posts that will not age well, isn't it

swores2• 4 years ago

Much easier to say of any single specific guess/prediction when there are lots of possible outcomes, than to actually guess the right one.

formercoder• 4 years ago

Yeah especially with his filing saying he’s waiving BDD. That’s a tough one to escape. He’s claiming that Twitter has made a material misstatement on their public filings. I’m sure that disclosure has been heavily diligenced.

hef1989817• 4 years ago

Worst case there are some wrong statements in Twitters fillings. Thise have to be incredibly severe to have an impact on Musk's obligation to purchase Twitter. A simple filing error or mistake is most likely not enough.

ekianjo• 4 years ago

Thus, the courts will obligate Musk to buy the business as he agreed to in April.

That last statement does not follow everything else before. Courts have no power to do that.

jsiepkes• 4 years ago

Why wouldn't courts have the power to do that? If the court rules you have no grounds to terminate the contract then you will have to execute the contract as originally agreed upon.

CogitoCogito19• 4 years ago

Well the court could obligate Musk to pay damages. One (simplistic) possibility might be to take the value Musk agreed to pay minus the current value of Twitter and force Musk to pay that. Then in theory Twitter would have received same value in the end.

NoboruWataya• 4 years ago

Yes they do, it's called specific performance. It's not the usual remedy for breach of contract, but in certain cases the court will grant it. I believe M&A agreements are one category of cases where US courts are inclined to grant specific performance, but I'm no expert.

rajnathani• 4 years ago

IIRC there’s just a $1B penalty in the acquisition clause for Musk if the transaction doesn’t go through.

paulcole2• 4 years ago

You don’t remember correctly.

The breakup fee is if an outside influence prevents the deal from going through. It’s not just for cases of “uh-uh i don’t wanna.”

johng• 4 years ago

What if they have willfully misrepresented the amount of bots on the platform and lied about it to shareholders for years. MAUs are a big part of any social networks valuation metrics.

ironlake• 4 years ago

It's a terrible contract: no due diligence, a specific performance clause. The only type of person who would ever sign a contract like that would be a dumb guy who got rich by accident.

HarHarVeryFunny• 4 years ago

I believe the agreement between Twitter and Musk had a $1B acquisition cancellation clause built into in, so if Musk can't successfully argue for breach of contract he'll have to pay this $1B break-up fee, rather than be forced to complete the purchase.

softwaredoug• 4 years ago

That’d be a nice infusion of capital for Twitter. And maybe that’s the best case scenario outcome that they’re actually hoping for.

papercrane2• 4 years ago

The contract includes a specific performance clause, so it's not as simple as a $1B break up fee.

icedchai• 4 years ago

You may be correct, but if you think Musk will actually buy Twitter at 54.20 now, I have a bridge to sell you. He can pay enough lawyers to hold up this transaction for years. "Time kills all deals", as they say.

rafiki6• 4 years ago

Yes, but even if they take him to court, it's highly likely that Musk and his legal team drag this out. It's not going to be a simple case. No contract law case ever is. And at that point, Twitter's business might keep suffering, to the point that their fair market value plummets, and they enter a very difficult financial situation. Then Musk can swoop in with a much lower price offer and they will accept simply due to their financial position and not being able or willing to continue the case in the courts. I think Musk will end up buying Twitter but at a much lower price.

zackees• 4 years ago

Musk stated that 50% of the users are bots and that Twitter is hiding this.

If true, he’s got an out.

drclau• 4 years ago

I’m curious if Twitter will kick Elon Musk off the network.

spoonjim• 4 years ago

Twitter is a great LBO candidate but Elon Musk tried to buy it as a consumption good rather than an asset investment. Not that surprised that the deal he made in a fit of pique did not seem so good without the beer goggles and with the market having fallen 30%. I hope courts compel him to execute the transaction but I also know that he probably has a million ways of getting out of it.

techwiz137• 4 years ago

Musk never wanted to buy Twitter, anyone who thought so was deluded. The guy is a psychopath and is playing with people's money by manipulating assets.

coffeeblack2• 4 years ago

Where does the Musk hate on hn come from?

Edit: that’s an actual question. If you downvote, at least comment why I’m wrong.

maxboone• 4 years ago

I don't think it's irrational

https://www.vanityfair.com/news/2022/04/elon-musk-twitter-te...

coffeeblack2• 4 years ago

Vanityfair?

Tomte• 4 years ago

Paul Graham: https://mobile.twitter.com/paulg/status/1545547177849667585

Let me answer that: they do not want to be owned by someone who doesn't want to.

But they want the 40B more.

singaporecode• 4 years ago

Man PG has jumped the shark completely. What the hell is that tweet - a deal is a deal, how can he implicitly say it should be ok for it not to be honoured (and with his twitter following, saying something publicly has an impact, however small)

kif• 4 years ago

That tweet seems a bit weird, especially coming from him.

dmix4• 4 years ago

It makes sense from purely a) founder/entrepreneur perspective which PG normally speaks from. Forcing someone to run a company they don’t believe in is normally a bad strategy. And b) assuming the board member cares about Twitter as an entity beyond the short term monetary gain/share prices. Since most board members are already wealthy and are motivated by more than $$ when taking on the job

Of course fundamentally the question is obviously moot give the legal obligation both from Musk and for the shareholders to optimize payout before a recession, but it’s an interesting thought experiment of whether it’s going to harm them either by going to court and/or having a disinterested owner.

Personally I think regardless if Elon is forced to buy Twitter he’s obviously going to do try to make the best out of his investment (or at least a better product). He’s a poweruser who clearly cares about the product. Can’t be much worse than it already is. His concern is probably just the price not that he doesn’t want to own Twitter.

ckastner2• 4 years ago

Let me answer that: they do not want to be owned by someone who doesn't want to.

That person wanted to own Twitter, though, and very much so. To that effect, that person made and absolutely ludicrous offer (e.g., merger without due digligence), just to end up owning Twitter as soon as possible.

The fact that a few weeks later, the same person changed their mind about Twitter, is absolutely their own fault. They agreed to terms.

m00dy• 4 years ago

Tesla and SpaceX may need his capital to survive the downturn. They both have an arsenal of options to raise further cash.

xbmcuser• 4 years ago

To me Musk is trying to get out of the deal while at the same time twitter owners know they found a great patsy so they are unwilling to release real numbers.

sidcool• 4 years ago

What is wonderful about this is that we all trust that courts will be objective in this. No amount of money will corrupt the courts here. I wish I could say the same for my country.

Fiahil• 4 years ago

While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors. For example, when Twitter finally provided access to the eight developer “APIs” first explicitly requested by Mr. Musk in the May 25 Letter, those APIs contained a rate limit lower than what Twitter provides to its largest enterprise customers. Twitter only offered to provide Mr. Musk with the same level of access as some of its customers after we explained that throttling the rate limit prevented Mr. Musk and his advisors from performing the analysis that he wished to conduct in any reasonable period of time.
Additionally, those APIs contained an artificial “cap” on the number of queries that Mr. Musk and his team can run regardless of the rate limit—an issue that initially prevented Mr. Musk and his advisors from completing an analysis of the data in any reasonable period of time. Mr. Musk raised this issue as soon as he became aware of it, in the first paragraph of the June 29 Letter: “we have just been informed by our data experts that Twitter has placed an artificial cap on the number of searches our experts can perform with this data, which is now preventing Mr. Musk and his team from doing their analysis.” That cap was not removed until July 6, after Mr. Musk demanded its removal for a second time.

Interesting. Technical limitation, or not, it's unlikely that their API was changed just to upset Musk's team. It's most probably a pile of wonky code with artificial limitations hardcoded by customer so it doesn't crash their database.

airza• 4 years ago

It doesn’t really matter. The time to ask these questions was before signing a binding contract to purchase the company.

michaelsshaw• 4 years ago

Just another example of Elon Musk committing to doing something crazy to generate headlines then not following through with it. Not sure when people are going to realize this guy's a total fraud.

umpalumpaaa• 4 years ago

I never understood the spam accounts argument…

One of musks main things he wanted to do with Twitter was to fight those spam/bot accounts.

He thinks getting rid of them is good for Twitter. If there are more bots than estimated Twitter will get even better than anticipated. If there are less bots than estimated this means the user base is more healthy than assume / one problem you don’t have to solve.

Each scenario is neither clearly good nor bad for a potential buyer.

buzzwords• 4 years ago

Is there anyway for Elon to prove there are more bots than Twitter claims? If so, would twitter then be sued by the sec?

yodegge• 4 years ago

Nobody should be forced to buy something they don't want to. > BUT HE AGREED BEFORE! He changed his mind after Twitter didn't provide the information they said they would. > BUT HE HAS TO BUY IT NOW! No, he doesn't have to, people can revoke buying offers. I'm afraid to ask your views on sexual consent.

EdSchouten• 4 years ago

At the cost of a financial penalty.

Try buying a house, but changing your mind right before going to a notary. At least here in the Netherlands congrats typically state you’ll have to pay 10%.

The agreement that Elon apparently had with Twitter included similar clauses.

jhugo• 4 years ago

The bot thing is obviously a pretext but I wouldn't be surprised if all the major social networks lie about what proportion of their active users are synthetic. In my experience, running ads on both Twitter and Facebook tends to drive an absurdly large amount of suspicious traffic if you don't very tightly target them. 5% seems unbelivably low just based on that experience and the experience of using Twitter in general.

pea• 4 years ago

In this sort of deal, is it common for the buyer (or whoever is leveraging them) to purchase some sort of hedge to protect themselves from the stock price diving during the DD or legal process? For instance, if I agree to buy company for $X but buy LEAPS to protect me if it dips below X*0.75.

philipwhiuk2• 4 years ago

Additionally, those APIs contained an artificial “cap” on the number of queries that Mr. Musk and his team can run regardless of the rate limit—an issue that initially prevented Mr. Musk and his advisors from completing an analysis of the data in any reasonable period of time. Mr. Musk raised this issue as soon as he became aware of it, in the first paragraph of the June 29 Letter: “we have just been informed by our data experts that Twitter has placed an artificial cap on the number of searches our experts can perform with this data, which is now preventing Mr. Musk and his team from doing their analysis.” That cap was not removed until July 6, after Mr. Musk demanded its removal for a second time.

It's hillarious (and pretty stupid) they capped his use of the firehose.

Notice of termination of Twitter merger agreement

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