Elon & Twitter

[Knightshade]

Well the ones I remember are, the Walmart case, and the Solar City shareholder cases, they dragged on for years.

As you say, this might be different, but that depends in part of what documentation and data is requested, how long that takes to compile, how long it takes to analyse. And if the judge allows any data requests.

Do you mean the Walmart solar panel case? Suit was filed late August 2019, and settled by November same year.

The solar city suit was an entirely different type of suit, filed after the deal it was suing about had closed- there was no timeliness factor at play like an active M&A agreement-- the people suing just wanted cash, not specific performance in a specific timeframe.... this court moves quite quickly on those, and I'm unaware of any examples that took "years" to resolve- even 6 months would be unusually long for such cases to be heard in this court.

Is this court the final word, or could either party appeal the judgement?

The only appeal available would be to the Delaware supreme court- which also tends to resolve chancery cases VERY quickly (often in days, when they're time sensitive- rarely ever more than months even when they're not- because they are not re-trying the case- the basis for appeal is that you think the lower court made a mistake, not that you want someone else to hear everything again)

 

[JRP3]

This may cause confusion for some of those who recently became Elon fans

Trump steps up attacks on Musk, who said Trump needs to 'sail into the sunset'

The former U.S. president said Musk would have "begged" him for government subsidies, in a message on his own social media app, Truth Social. "When Elon Musk came to the White House asking me for help on all of his many subsidized projects, whether it's electric cars that don't drive long...

www.yahoo.com

 

[Bet TSLA]

Tanking the value of a stock so that you can buy it is market manipulation.
Admittedly I’m just assuming that would be illegal. Pumping and dumping is illegal.

I suppose you can make a case for Elon tanking the value of TWTR. But compared to other similar stocks, it sure seems like his offer to buy is the only thing propping it up. You have noticed that most stocks are down substantially, right? Some far more than TWTR, and often for no reason at all.

 

[Daniel in SD]

I suppose you can make a case for Elon tanking the value of TWTR. But compared to other similar stocks, it sure seems like his offer to buy is the only thing propping it up. You have noticed that most stocks are down substantially, right? Some far more than TWTR, and often for no reason at all.

It's called poop and scoop (love this!) and it's illegal.

Poop and Scoop: What It is, How It Works, Example

A poop and scoop scheme spreads false information in an effort to force a stock's price lower, thereby offering an illegal opportunity to purchase at a discount.

www.investopedia.com

He literally tweeted a poop emoji. A week before this the stock was trading at ~$50 a share.

https://twitter.com/x/status/1526246899606601730

 

[Daniel in SD]

Recent Delaware Court of Chancery case where a buyer tried to claim an MAE and a violation of "ordinary course covenant." The court ordered specific performance.

Court of Chancery Finds Pandemic Was Not an MAE—<em>Snow Phipps</em>

Read our latest post from Fried Frank senior counsel Gail Weinstein and partners Philip Richter, and Steven Epstein.

corpgov.law.harvard.edu

The judge in the case is now Chancellor and will either preside over Twitter's case herself or assign a Vice Chancellor (unless the parties settle of course).

• The court characterized the decision as “chalking up a victory for deal certainty”—reaffirming that deal certainty is an objective the court continues to respect.

 

[mongo]

Recent Delaware Court of Chancery case where a buyer tried to claim an MAE and a violation of "ordinary course covenant." The court ordered specific performance.

Court of Chancery Finds Pandemic Was Not an MAE—<em>Snow Phipps</em>

Read our latest post from Fried Frank senior counsel Gail Weinstein and partners Philip Richter, and Steven Epstein.

corpgov.law.harvard.edu

The judge in the case is now Chancellor and will either preside over Twitter's case herself or assign a Vice Chancellor (unless the parties settle of course).

Interesting, but doesn't seem very relevent. Their sales were down due to the pandemic and there was a pandemic carve out in the Agreement.

 

[mspohr]

It's called poop and scoop (love this!) and it's illegal.

Poop and Scoop: What It is, How It Works, Example

A poop and scoop scheme spreads false information in an effort to force a stock's price lower, thereby offering an illegal opportunity to purchase at a discount.

www.investopedia.com

He literally tweeted a poop emoji. A week before this the stock was trading at ~$50 a share.

https://twitter.com/x/status/1526246899606601730

But I don't think he wants to buy at any price.
He did the poop but no scoop.

 

[Knightshade]

Interesting, but doesn't seem very relevent. Their sales were down due to the pandemic and there was a pandemic carve out in the Agreement.

The more interesting bit to me was when the buyer tried to sabotage their own financing, even with a financing carve out in the deal, the judge said nope, you're buying them anyway and you can figure out your financing to do it.

 

[mongo]

The more interesting bit to me was when the buyer tried to sabotage their own financing, even with a financing carve out in the deal, the judge said nope, you're buying them anyway and you can figure out your financing to do it.

Yeah, but they still had financing under the original terms, just not at the different terms they tried to get. If no one wanted to back the purchase at all, that would be different.

 

[Daniel in SD]

But I don't think he wants to buy at any price.
He did the poop but no scoop.

I agree. Someone was asking if he could poop and scoop.
The pooping is definitely in violation of the merger agreement though. Unfortunately for Twitter their only recourse for the pooping is to terminate the deal and try to get $1 billion from him and they want more than that!
They have to put up with getting OWNED if they want to get owned.

 

[Bouba]

I am also curious about the low value of Twitter shares if this case is a slam dunk for them

 

[Daniel in SD]

I am also curious about the low value of Twitter shares if this case is a slam dunk for them

Me too. It must not be a slam dunk!
Or, the case itself is a slam dunk but Elon will defy the court order.
I'm a big believer in the efficient market hypothesis. To me the price suggests the case is certain to go to trial (implied settlement amount seems too low for Twitter shareholders). Going to be a banger!

 

[kabin]

I am also curious about the low value of Twitter shares if this case is a slam dunk for them

I would guess it's become an arbitrage and most people don't like messing with arbitrage risk so they just sell it.

 

[Knightshade]

Me too. It must not be a slam dunk!
Or, the case itself is a slam dunk but Elon will defy the court order.
I'm a big believer in the efficient market hypothesis. To me the price suggests the case is certain to go to trial (implied settlement amount seems too low for Twitter shareholders). Going to be a banger!

well, as I mentioned earlier most experts think twitter has a likely win, but more in the 70/30 or maybe 80/20 sense, not the 99/1 sense.

That said- most of the market aren't expert M&A lawyers either-- and I think assuming everyones opinion is equal to everyone elses on this is...not accurate.


As to the efficient market hypothesis-

 

[Daniel in SD]

well, as I mentioned earlier most experts think twitter has a likely win, but more in the 70/30 or maybe 80/20 sense, not the 99/1 sense.

If I thought it was 70/30 I would buy $100k in Twitter shares today. Buy for $34, 70% chance of $54.20, 30% chance of $20? Expected value is $44. 30% expected return in < 6 months.

 

[Knightshade]

I think the real model is probably a bit more complex than that... there's SOME percentage chance they negotiate a lower price outside of the courtroom, reducing your gains.

There's SOME percentage chance there's actual discovery that ends up impairing TWTR price under $20 a share increasing your loss.


Using that 100k to sell 20% OTM TSLA put spreads probably gets you a reasonably comparable return with a lot less what-ifs. (Not financial advice)

 

[Daniel in SD]

Twitter has sued.

DocumentCloud

www.documentcloud.org

 

[Daniel in SD]

Glad we finally have an answer to this. 100 accounts a quarter did seem low!

"Cognizant of its own obligations under the merger agreement, Twitter proceeded with the May 13 diligence meeting, which lasted for about two hours. During this session, Twitter explained, among other things, that its spam estimation process entails daily sampling for a total set of approximately 9,000 accounts per quarter that are manually reviewed.

Later that day, Musk Tweeted publicly a misrepresentation that Twitter’s sample size for spam estimates was just 100.

The next day, he boasted publicly that he had violated his non- disclosure obligations:

Musk’s Tweets on May 13 and 14 violated his obligations under the merger agreement, including the provisions prohibiting public comments not consented to by Twitter, disparagement, misuse of information provided under Section 6.4, requiring best efforts to consummate the merger.

On May 16, Agrawal Tweeted that Twitter’s 5% estimate is based on “multiple human reviews (in replicate) for thousands of accounts, that are sampled at random, consistently over time, from *accounts we count as mDAUs*.” He explained that the company’s human review process “uses both public and private data (eg, IP address, phone number, geolocation, client/browser signatures, what the account does when it’s active...) to make a determination on each account” — something Twitter also explains in its SEC filings. Agrawal stood by Twitter’s estimate, and noted that the company is constantly updating its systems."

 

[rjack1282]

Lol you guys are funny. 99.8235% chance this is settled out of court for an undisclosed amount.

 

[Bouba]

Breaking news Twitter are suing Elon