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Did Musk buy Twitter
- Thread starter ThomasD
- Start date
Tam
Well-Known Member
So far, Twitter is not open for a renegotiation. Full speed ahead, it filed the preliminary proxy statement for "completing the transaction on the agreed price and terms as promptly as practicable."
www.axios.com
Twitter turns the tables on Musk, will “enforce” merger
“We intend to close the transaction and enforce the merger agreement,” Twitter’s board said Tuesday.
www.axios.com
Tam
Well-Known Member
Congratulations to those who asked for the poison pill. It wasn't used but it still worked. Elon Musk terminated the deal:
Elon Musk notifies Twitter he is terminating deal
"Twitter has not complied with its contractual obligations," an attorney for Musk wrote.
www.cnbc.com
He blames Twitter and probably that's to get out of the termination fee.
If Twitter wants the fee, it now has to go to court to prove that it's not its own fault.
Lol what does anyone have to gain after this song and dance? So we now know that Twitter DAUs are > 5% spam bots? Do Russian propaganda accounts count as bots?
Tam
Well-Known Member
The Left: Since Elon Musk will not be its boss and will no longer be able to give the order to re-instate Trump.
Huh?
Trump says he won't return to Twitter if his account is reinstated | TechCrunch
Former President Donald Trump said on Monday that he will not be returning to Twitter if his account is reinstated, according to a statement he provided
techcrunch.com
stopcrazypp
Well-Known Member
As mentioned up thread, I don't think the poison pill provision played much factor. The cratering of Tesla's stock as a result of the news (which increased the effective cost for Musk to buy Twitter), then Twitter's stock itself falling, plus employees internally that don't want Musk owning the company anyways, probably played a much bigger factor.Congratulations to those who asked for the poison pill. It wasn't used but it still worked. Elon Musk terminated the deal:
Elon Musk notifies Twitter he is terminating deal
"Twitter has not complied with its contractual obligations," an attorney for Musk wrote.
He blames Twitter and probably that's to get out of the termination fee.
If Twitter wants the fee, it now has to go to court to prove that it's not its own fault.
Tam
Well-Known Member
Trump has not been the one who wants to buy Twitter.
The new boss will not be Trump.
The new buyer for the new private Twitter was planned as Elon Musk.
So, whether Trump accepts or denies reinstatement, it's non-relevant.
What was relevant was what the new boss wants to do with Twitter.
Tam
Well-Known Member
Same as in Elon Musk's case. He could have taken Tesla private in 2018 and Twitter in 2022 "if he had not been on twitter".
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TSLY
Member
Knightshade
Well-Known Member
Nope. Twitter isn't going to ask for the 1B.
They're going to ask he pay full price as he agreed to for the whole company.
Burden of proof is on Elon, not twitter, in such a case....and it's a pretty massive burden based on the history of such cases in Delaware courts.
One company- ever- has gotten out of a purchase agreement this way- and it was by proving the company they were buying had intentionally engaged in repeated federal regulatory fraud... not that "the guess about bots they admit in their SEC filings is a guess turned out wrong"
Tam
Well-Known Member
The market thinks that the termination only costs Elon Musk $1 billion so he doesn't have to sell off too many TSLA and the share price went up.
You do raise a good point that it's not just $1 billion, it's a $44 billion purchase that the court will likely side with Twitter.
It's a big mess because Elon Musk considers Twitter as a house that has 90% termites that he has decided not to buy it anymore:
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Disagree. 5%, 8%, even 15%, i.e., 3x, might be a reasonable guess, but 50% (10x) is not. Obviously the jury will decide where to draw taht line.
Not saying its 50%, but Elon will have to prove that's far from 5% to win in court.
Interesting read:
What’s Next in the Elon Musk-Twitter Saga? A Court Battle
Most legal experts say Twitter has the upper hand. But Musk revels in brinkmanship.
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Knightshade
Well-Known Member
There is no jury- this will be decided by a corporate law judge in a Delaware chancery court, which does not use Juries.
Elon already admitted he can't prove anything-- one of this basic claims here is twitter hasn't given him enough info to accurately determine a #.
The problem is- in M&A, you perform such due dillegence before you make your offer
Elon chose to skip that- so it's too late now.
The only way he could win in court now would be to prove all 3 of these:
That the # in the SEC filing is not just wrong, but drastically wrong
AND
That it's not only wrong because twitter used poor or lazy methods to get it- but that they intentionally with deliberate fraud gave a drastically wrong number
AND
That that number being that far off is a material adverse event for the business
And he has to start with the last one-- because if the judge doesn't agree that "A made-up measurement the company admits is a guess that might be wrong being wrong" is NOT an MAE- then Elon won't even be allowed discovery to address the other 2 items.
Interesting read:
What’s Next in the Elon Musk-Twitter Saga? A Court Battle
Most legal experts say Twitter has the upper hand. But Musk revels in brinkmanship.www.nytimes.com
Behind a paywall so unable to read I'm afraid (tried incognito window which occasionally gets past these but it didn't in this case)
Tam
Well-Known Member
Musk’s advantage:
.Impulsiveness
.Brinkmanship
.Bankers
.Lawyers: Skadden was able to renegotiate a discount of $420 million for LVMH.
.Followers
.No other bidders
.Bots as a bargaining chip
.Prolong the court (that affects morales and millions) and pressure Twitter for a quick settlement
Possible outcomes:
.Deal is terminated
.Deal must be finished
.Price renegotiation.
Similar cases:
2001: Tyson Foods was forced to complete the meatpacker IBP acquisition despite charges of IBP’s poor financial health and questionable accounting.
2020: LVMH Moët Hennessy Louis Vuitton renegotiated the price from $16 billion down to $15.8 or $420 million less.
2008: Apollo Global Management v Huntsman and Hexion resulted in a $1 billion settlement to terminate the deal even when the seller had no violations at all.
2017: Fresenius Kabi successfully walked away from the $3.7 billion Akorn acquisition because of the charge of regulatory irregularities and the earnings fell after signing.
It will be a bigger mess if Elon Musk will defy the court and refuse to go through the deal (as in the case of challenging the California Health Department, SEC supervised tweets...)
Twitter might face shareholders' lawsuit charging the deal is too cheap.
The article summed up “A lawsuit doesn’t give you a deal. It generally gives you a protracted headache. And a damaged company.”
Knightshade
Well-Known Member
Appreciate the highlights....
On musks advantages--- most of those aren't really things that are relevant to the court... The judge doesn't care how many followers Elon has....and Delaware chancery tends to be (by legal standards) a pretty fast process you can't prolong overly much.
As to the similar cases-
The Akorn example is the only time- ever- that someone "won" defending a specific performance clause lawsuit--- and again that involved a LOT of fraud, including of government regulatory agencies. Nothing Elon has even suggested MIGHT be going on with twitter rises to remotely that level. Every other case like this -ever- the deal was ordered to be completed...because the bar to get out of such an agreement is incredibly high.
The Tyson case the court ruled the deal had to go through.
In the Apollo case, the court ruled again to force the buyer to buy- at full price.
www.buyoutsinsider.com
After that, in private negotiations, the buyer instead paid 1 billion (vs what was originally a total of 6.5 billion for the purchase) to instead get out of it... in part because neither side really wanted the deal at that point and getting ~1/6th of the total amount to NOT do it was fine with the other side... but the COURT ruling was full price.
LVMH case the court did not rule at all---- each side sued the other- but before any decision was reached on either case they decided to drop the lawsuits and do a slightly cheaper deal.
www.law360.com
The tl;dr of it all is that if the delaware chancery court gets to ruling on this, it's very very likely they rule for twitter and find that Elon needs to pay full price as he agreed to.
That doesn't preclude that they might negotiate a settlement prior to a court ruling of course.... But right now I don't honestly see a ton of reason for Twitter to do so.
If the company is damaged goods by all of this, the BEST outcome for shareholders would be forcing a payment of $54.20 a share for a company clearly not worth that much after all. Doing a "let them out of it for 15% of the deal" thing like Apollo would still be a disservice to shareholders given the difference in current share price to the offer price.
I suppose they might have a reason to do a deal like LVMH, where they sell at a TINY (~3.8% in that case) discount just to speed things up... but unless there's a pretty massive other shoe for Elon to drop I don't like where this is headed as a TSLA shareholder.
On musks advantages--- most of those aren't really things that are relevant to the court... The judge doesn't care how many followers Elon has....and Delaware chancery tends to be (by legal standards) a pretty fast process you can't prolong overly much.
As to the similar cases-
The Akorn example is the only time- ever- that someone "won" defending a specific performance clause lawsuit--- and again that involved a LOT of fraud, including of government regulatory agencies. Nothing Elon has even suggested MIGHT be going on with twitter rises to remotely that level. Every other case like this -ever- the deal was ordered to be completed...because the bar to get out of such an agreement is incredibly high.
The Tyson case the court ruled the deal had to go through.
In the Apollo case, the court ruled again to force the buyer to buy- at full price.
Court Backs Huntsman In Dispute Versus Apollo Mgmt, Hexion
Chemical maker Huntsman Corp. said a court has ordered private equity firm Apollo Management and its unit Hexion Specialty Chemicals Inc. to honor the terms of their $6.5 billion offer to acquire Huntsman. Apollo and Hexion have been trying to back out of the deal, which was announced at the...
www.buyoutsinsider.com
After that, in private negotiations, the buyer instead paid 1 billion (vs what was originally a total of 6.5 billion for the purchase) to instead get out of it... in part because neither side really wanted the deal at that point and getting ~1/6th of the total amount to NOT do it was fine with the other side... but the COURT ruling was full price.
LVMH case the court did not rule at all---- each side sued the other- but before any decision was reached on either case they decided to drop the lawsuits and do a slightly cheaper deal.
Tiffany, LVMH Lower Merger Price To $15.8B, Settle Dispute - Law360
Tiffany & Co. and LVMH Moet Hennessy Louis Vuitton will lower the price tag of their merger from $16.2 billion to roughly $15.8 billion and have agreed to settle their legal dispute in Delaware, the companies said Thursday.
www.law360.com
The tl;dr of it all is that if the delaware chancery court gets to ruling on this, it's very very likely they rule for twitter and find that Elon needs to pay full price as he agreed to.
That doesn't preclude that they might negotiate a settlement prior to a court ruling of course.... But right now I don't honestly see a ton of reason for Twitter to do so.
If the company is damaged goods by all of this, the BEST outcome for shareholders would be forcing a payment of $54.20 a share for a company clearly not worth that much after all. Doing a "let them out of it for 15% of the deal" thing like Apollo would still be a disservice to shareholders given the difference in current share price to the offer price.
I suppose they might have a reason to do a deal like LVMH, where they sell at a TINY (~3.8% in that case) discount just to speed things up... but unless there's a pretty massive other shoe for Elon to drop I don't like where this is headed as a TSLA shareholder.
TSLY
Member
Twitter can't afford to litigate this. It doesn't have the time or money and the publicity of a trial will bury the company. I predict this will settle.
Knightshade
Well-Known Member
uh... wut?
Again the Delaware chancery court is generally pretty fast.
This isn't a situation where it can be dragged out for years with crazy legal bills and repeated appeals.
Twitter can't afford not to litigate this as they'd be facing massive shareholder lawsuits that would be far more expensive to litigate and settle if they didn't.
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