Elon & Twitter

[Knightshade]

Is not wanting to pay an amount reason for confidence?

Twitter promised less than 5 percent of mDAU would be bots, right?

No, they did not.

Folks really need to read the actual mDAU description and disclaimers in the SEC filings

Because a lot of people- seemingly including Elon- seem to think it says stuff it does not.

That's what the buyer and seller agreed upon.
If the seller doesn't deliver adequate data/information to prove <5% bots, wouldn't that be a reason to cancel the deal?

Nope.

If you were concerned about the figure you ask for evidence on it before you make your offer.

Twitter isn't the one the burden of proof is on here. Elon needs to prove there's been an MAE, not "he feels" there has,

Stating Twitter lied in the court of public opinion is not equivilent to presenting data to a judge indicating Twitter's SEC filings are materially false.

But the judge doesn't care about public opinion.

If they can't present data proving Twitters claims are materially false they have no case- and they admit they can't-- they only have a "strong feeling" about it.

Further as mentioned even if they DID have evidence of THAT they need evidence of multiple OTHER things too (including it being both on a massive scale AND intentional fraud rather than just a bad way of measuring)- which they ALSO haven't suggested they have any evidence of.

Recall, Twitter is forcing the issue by suing

....what?


Elon is forcing the issue by refusing to honor the purchase agreement he signed.

Twiter suing is literally just to enforce that agreement

. Elon has no motivation outside that to further prove Twitter incorrect.
By suing, it forces the question of Elon's grounds for termination.

Again- not how this works

It forces Elon to provide substantial evidence proving there has been an MAE.

Evidence he already admits he only has a "strong feeling" about- but can't legally prove.

If the data Twitter provided Elon, subsequently used by Elon in court, indicates >>5%, Elon's cancellation is justified. Twitter would need to support their =<5% position with data to the court, which is the data Elon has been requesting.

Again this is flat out wrong.

The number being >5% is not remotely sufficient to scuttle the deal- even if Elon could PROVE that was the case (which he can't- he only "feels" it's higher based on limited info)

He then needs to prove it's massively higher.... In previous cases for example an error in actual revenue of over 20% wasn't sufficient to be an MAE.

So "# of bots being 10% instead of 5%" sure wouldn't be- especially when Twitter says it might be higher than 5% in the disclosures and has for ~10 years


THEN he'd need to ALSO prove this mistake was intentionally fraudulent-- not that Twitter just used a lazy metric. Something of which there's ALSO no evidence.



And no, he won't get unlimited discovery rights to go fishing around for all that either unless he's already got strong evidence it's there.


The only likely source would be if he's got dirt from Jack Dorsey like internal incriminating emails.... which would be a weird thing for Jack to give him since it'd likely put Jack on the hook for billions in lawsuits and criminal charges (again even assuming such evidence existed)

 

[mongo]

But the judge doesn't care about public opinion.

Never said they did.

If they can't present data proving Twitters claims are materially false they have no case- and they admit they can't-- they only have a "strong feeling" about it.

Like I did say, if the limited data Twitter provided shows a material issue, Elon is justified in acting on that.

Further as mentioned even if they DID have evidence of THAT they need evidence of multiple OTHER things too (including it being both on a massive scale AND intentional fraud rather than just a bad way of measuring)- which they ALSO haven't suggested they have any evidence of.

Humm, so it's okey to misrepresent the profitability of your company and force a purchase as long as it was due to ineptitude? (Which itself devalues the company).
Interesting legal theory...

....what?


Elon is forcing the issue by refusing to honor the purchase agreement he signed.

Twiter suing is literally just to enforce that agreement

The issue being forced is Twitters mDAU representation. Elon doesn't need to care about that outside of Twitter forcing him to.

Again- not how this works

It forces Elon to provide substantial evidence proving there has been an MAE.

Evidence he already admits he only has a "strong feeling" about- but can't legally prove.

Again, he has no need at that point to claim it as fact. Nor, as a sensible person, would he when he knows he has not been given all the data.

Again this is flat out wrong.

The number being >5% is not remotely sufficient to scuttle the deal- even if Elon could PROVE that was the case (which he can't- he only "feels" it's higher based on limited info)

He then needs to prove it's massively higher.... In previous cases for example an error in actual revenue of over 20% wasn't sufficient to be an MAE.

So "# of bots being 10% instead of 5%" sure wouldn't be.

Did I say 10%? Do you know what the notion ">>" means? Would you prefer ">>>" or ">>>>"?

THEN he'd need to ALSO prove this mistake was intentionally fraudulent-- not that Twitter just used a lazy metric. Something of which there's ALSO no evidence.

Again, interesting legal theory...
Not sure how you can claim there is "no evidence" though.

And no, he won't get unlimited discovery rights to go fishing around for all that either unless he's already got strong evidence it's there.

Never said he wanted a fishing trip. All he needs (in my non lawyer opionion) is for the data he's already been provided to support his position.

 

[ToTheStars]

The number being >5% is not remotely sufficient to scuttle the deal- even if Elon could PROVE that was the case (which he can't- he only "feels" it's higher based on limited info)

On basis of what information do you state he can't prove it?

 

[Daniel in SD]

On basis of what information do you state he can't prove it?

He has provided zero evidence.

 

[markb1]

On basis of what information do you state he can't prove it?

Just read the SEC filing. Twitter essentially says the 5% figure is just a guess and they’re not representing it to be correct. So they didn’t make much of a claim at all around that number.

 

[Knightshade]

Like I did say, if the limited data Twitter provided shows a material issue, Elon is justified in acting on that.

Except it doesn't.

It shows Elon was unable to confirm twitters number.

Which isn't, inherently, a material issue.

Humm, so it's okey to misrepresent the profitability of your company and force a purchase as long as it was due to ineptitude? (Which itself devalues the company).
Interesting legal theory...

Also the one the court uses.

Fraud requires intent. Literally. It's part of the definition of the crime

Again, he has no need at that point to claim it as fact.

Of course he does.

To get out of the deal he needs to be able to prove with facts an MAE occured.

Not "I didn't ask enough questions before I made an offer- so now I "feel" there might be an MAE but I can't actually prove that.

On basis of what information do you state he can't prove it?

His own admission that it's only a "strong belief" not a provable fact.


If he had actual proof he could have included that in the SEC filing saying he's walking away-- and we'd be done. There'd be no basis for twitter to sue him if he had actual evidence proving an MAE


But as noted previously- proving an MAE is a very very hard thing to do-- even in cases where there was a much larger, more obvious, case of actual fraud.



Only one case- in history- has passed the requirements to prove an MAE. And in that case it was due to repeated fraud the company engaged in for federal FDA reporting in addition to a company-specific collapse in revenue in the quarter immediately after the original deal was signed and in direct contradiction of the companies own projections (not just everyone is down because it's a recession).

 

[loquitur]

A relevant article by authors familiar with M&A: Why Musk May Be Stuck

 

[UltradoomY]

A relevant article by authors familiar with M&A: Why Musk May Be Stuck

This is paywalled - any excerpts?

 

[ZenRockGarden]

Does anyone in business find the way this went down... just totally backward?

If you are trying to acquire something, you do diligence and throw all negatives at it BEFORE agreeing to a price and signing the deal.

Once you've signed the deal, you are highly motivated to preserve the value of the thing you just agreed to buy, so even if you have further questions you bring them up in a nice private back room filled with lawyers under attorney-client priv.

This deal went completely backwards of that, with Elon telling everyone all the amazing things he was gonna do with Twitter -while- he negotiated on price, he then signed the deal at a very high value to get past the Twitter board and appeal to the shareholders, and now that the deal is signed he is trashing the living crap out of the company he agreed to buy, driving the share price into the floor. It's just nuts.

 

[elasalle]

https://twitter.com/x/status/1546552413083111424

 

[mongo]

TWTR just hit -10% SP to trigger it's circuit breaker:

Note: $36.81 * 0.9 = $33.129 triggers the Uptick Rule.


View attachment 827466

Along the lines of the stock price...

EX-2.1
Does 6.1 of the agreement negate the poison pill? If so, buying more shares now would be a 39% savings for Elon vs buyout price.

(b) split, combine, reclassify, redeem, repurchase or otherwise acquire or amend the terms of any capital stock or other equity interests or rights (except in connection with (i) the acceptance of shares of Company Common Stock as payment for the per share exercise price of the Company Options or as payment for Taxes incurred in connection with the exercise, vesting and/or settlement of Company Equity Awards, in each case, in accordance with the applicable Company Benefit Plan, (ii) the forfeiture of Company Equity Awards), (iii) pursuant to the exercise of purchase rights under the Company ESPP or (iv) pursuant to other than the Company ASR Confirmations and the Company Bond Hedge Transactions;


(c) except as permitted pursuant to Section 6.1(f), issue, sell, pledge, dispose, encumber or grant any shares of its or its Subsidiaries’ capital stock or other equity interests, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its Subsidiaries’ capital stock or equity interests except for transactions among the Company and its direct or indirect wholly owned Subsidiaries or among the Company’s direct or indirect wholly owned Subsidiaries; provided, however, that the Company may issue shares of Company Common Stock upon the exercise of any Vested Company Option or payment of any other Company Equity Award that becomes vested, pursuant to the exercise of purchase rights under the Company ESPP or to satisfy any obligations under the Existing Convertible Notes;


(d) other than any shares of the Company Common Stock issuable upon conversion of any series of Existing Convertible Notes in accordance with their terms, authorize, declare, pay or make any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock or other equity interests, other than dividends paid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Company;

 

[Artful Dodger]

Along the lines of the stock price...

EX-2.1
Does 6.1 of the agreement negate the poison pill? If so, buying more shares now would be a 39% savings for Elon vs buyout price.

Beats me! I have no relevent M&A experience, and it has been YEARS since I stayed at a Holiday Inn.

Overall, I think Elon means to fix Twitter one way or other: either by buying them and fixing the tech, or by 'outing' them and watching them go down in flames. JMO/YMMV.

Cheers!

 

[ZenRockGarden]

Beats me! I have no relevent M&A experience, and it has been YEARS since I stayed at a Holiday Inn.

Overall, I think Elon means to fix Twitter one way or other: either by buying them and fixing the tech, or by 'outing' them and watching them go down in flames. JMO/YMMV.

Cheers!

Since Elon already owns a very large position in TWTR, making them go down in flames for the pure joy of it is kinda self destructive.

 

[Daniel in SD]

No, they did not.

Folks really need to read the actual mDAU description and disclaimers in the SEC filings

Because a lot of people- seemingly including Elon- seem to think it says stuff it does not.





Nope.

If you were concerned about the figure you ask for evidence on it before you make your offer.

Twitter isn't the one the burden of proof is on here. Elon needs to prove there's been an MAE, not "he feels" there has,








But the judge doesn't care about public opinion.

If they can't present data proving Twitters claims are materially false they have no case- and they admit they can't-- they only have a "strong feeling" about it.

Further as mentioned even if they DID have evidence of THAT they need evidence of multiple OTHER things too (including it being both on a massive scale AND intentional fraud rather than just a bad way of measuring)- which they ALSO haven't suggested they have any evidence of.




....what?


Elon is forcing the issue by refusing to honor the purchase agreement he signed.

Twiter suing is literally just to enforce that agreement




Again- not how this works

It forces Elon to provide substantial evidence proving there has been an MAE.

Evidence he already admits he only has a "strong feeling" about- but can't legally prove.





Again this is flat out wrong.

The number being >5% is not remotely sufficient to scuttle the deal- even if Elon could PROVE that was the case (which he can't- he only "feels" it's higher based on limited info)

He then needs to prove it's massively higher.... In previous cases for example an error in actual revenue of over 20% wasn't sufficient to be an MAE.

So "# of bots being 10% instead of 5%" sure wouldn't be- especially when Twitter says it might be higher than 5% in the disclosures and has for ~10 years


THEN he'd need to ALSO prove this mistake was intentionally fraudulent-- not that Twitter just used a lazy metric. Something of which there's ALSO no evidence.



And no, he won't get unlimited discovery rights to go fishing around for all that either unless he's already got strong evidence it's there.


The only likely source would be if he's got dirt from Jack Dorsey like internal incriminating emails.... which would be a weird thing for Jack to give him since it'd likely put Jack on the hook for billions in lawsuits and criminal charges (again even assuming such evidence existed)

You are factually correct (as always ) but I wonder why Twitter is trading at $32.65 a share? Clearly the market thinks the chances of shareholders getting $54.20 a share is low.
The maximum settlement that Twitter can receive in the contract is only $1 billion. There is the specific performance clause so the judge could order Elon to buy Twitter for the agreed upon price. What if the judge orders Elon to buy Twitter and he refuses? Is it enforceable?

Matt Levine talks about it here: Bloomberg - Are you a robot?

 

[JRP3]

Since Elon already owns a very large position in TWTR, making them go down in flames for the pure joy of it is kinda self destructive.

Elon seems to have no concerns with destroying large amounts of his wealth.

 

[vikings123]

I think the best out for Elon might be this hypothetical scenario. What if another party steps in and makes an offer to buy twitter @36$(10% premium to today's closing price). If the SP continues to drop the offer can be lower. At some point other parties will show interest imo.

As a TSLA investor I'm honestly not looking forward to the legal battle unfold over a period of 6-12 months. This whole deal was so hastily completed. I'm also surprised by the uber TSLA bulls not even thinking of the possibility of Elon losing this court battle. I don't get how the possibility of Twitter winning this case is incomprehensible.

 

[ZenRockGarden]

I think the best out for Elon might be this hypothetical scenario. What if another party steps in and makes an offer to buy twitter @36$(10% premium to today's closing price). If the SP continues to drop the offer can be lower. At some point other parties will show interest imo.

As a TSLA investor I'm honestly not looking forward to the legal battle unfold over a period of 6-12 months. This whole deal was so hastily completed. I'm also surprised by the uber TSLA bulls not even thinking of the possibility of Elon losing this court battle. I don't get how the possibility of Twitter winning this case is incomprehensible.

The best scenario I can think of for Tesla is that Twitter quickly gets the upper hand in court proceedings, Elon's lawyers agree to settle for $1B walkaway cost, freeing up Elon to focus on making cars and putting his leftover personal $7B back into Tesla Stock.

 

[Daniel in SD]

I think the best out for Elon might be this hypothetical scenario. What if another party steps in and makes an offer to buy twitter @36$(10% premium to today's closing price). If the SP continues to drop the offer can be lower. At some point other parties will show interest imo.

As a TSLA investor I'm honestly not looking forward to the legal battle unfold over a period of 6-12 months. This whole deal was so hastily completed. I'm also surprised by the uber TSLA bulls not even thinking of the possibility of Elon losing this court battle. I don't get how the possibility of Twitter winning this case is incomprehensible.

Twitter shareholders would still want the missing $18.20 a share. Many TSLA bulls think Elon already has evidence that Twitter filed fraudulent 10-K's or will somehow get evidence during the trial.

The best scenario I can think of for Tesla is that Twitter quickly gets the upper hand in court proceedings, Elon's lawyers agree to settle for $1B walkaway cost, freeing up Elon to focus on making cars and putting his leftover personal $7B back into Tesla Stock.

There is no way Twitter is going to settle for $1B. The board has to fight or they'll be sued by shareholders. Presumably they also might want to serve on another corporate board in the future and I imagine costing shareholders $20+ billion won't help in getting a future gig.

Twitter's lawyers just filed this email with the SEC. They do not agree that the agreement is terminated (of course): EX-99.2

Dear Mr. Ringler:

This letter is sent on behalf of Twitter, Inc. (“Twitter” or “the Company”) in response to your July 8, 2022 letter, in which X Holdings I, Inc. purports to terminate the Agreement and Plan of Merger (the “Agreement”) by and among Twitter, X Holdings I, Inc. (“Parent”), X Holdings II, Inc. (“Acquisition Sub”), and Elon R. Musk (together with Parent and Acquisition Sub, the “Musk Parties”). Capitalized terms used here and not otherwise defined have the meanings ascribed to them in the Agreement.​

Mr. Musk’s and the other Musk Parties’ purported termination is invalid and wrongful, and it constitutes a repudiation of their obligations under the Agreement. Contrary to the assertions in your letter, Twitter has breached none of its obligations under the Agreement, and Twitter has not suffered and is not likely to suffer a Company Material Adverse Effect. The purported termination is invalid for the independent reason that Mr. Musk and the other Musk Parties have knowingly, intentionally, willfully, and materially breached the Agreement, including but not limited to Sections 6.3, 6.8, and 6.10 thereof. The Agreement is not terminated, the Bank Debt Commitment Letter and the Equity Commitment Letter remain in effect, and Twitter demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement, including their obligations to use their respective reasonable best efforts to consummate and make effective the transactions contemplated by the Agreement (including by taking all steps necessary to obtain a favorable outcome under the United Kingdom’s National Security and Investment Act 2021), the Bank Debt Commitment Letter, and the Equity Commitment Letter. As it has done, Twitter will continue to provide information reasonably requested by Mr. Musk under the Agreement and to diligently take all measures required to close the transaction.

Twitter reserves all contractual, legal, and other rights, including its right to specifically enforce the Musk Parties’ obligations under the Agreement.
​

​

 

[vikings123]

There is no way Twitter is going to settle for $1B. The board has to fight or they'll be sued by shareholders. Presumably they also might might want to serve on another board in the future and I imagine costing shareholders $20+ billion won't help in getting a future gig.

Twitter's lawyers just filed this email with the SEC. They do not agree that the agreement is terminated (of course): EX-99.2

Twitter will not settle for $1B and Elon, being Elon, will not settle for more than $1B. The precedent with older cases is where this gets real. Let's also not forget that Elon has made more political enemies in the past. People in the establishment and media are likely salivating at the opportunity to finally get Elon. IMO Twitter will get a lot of support from other groups.

 

[ZenRockGarden]

There is no way Twitter is going to settle for $1B

Yeah, I didn't say it was likely - just the best for Tesla. Lawyers love billable hours so a long, expensive, ugly court fight is how it will probably actually go even though the smart answer is the one I suggested. Twitter never wanted to be bought, Elon doesn't want the thing at anything near the price he promised, the winning move is for Twitter to get its independence and a nice cash infusion and Elon gets to go back to actual work.