Elon Musk (yet another authoritarian)

[Farfromgeneva]

Asking as tesla and the equity market’s holds up. He’s so levered and illiquid.

[Typical Lax Dad]

Asking as tesla and the equity market’s holds up. He’s so levered and illiquid.

“Mr. Musk’s move sets up what is likely to be an ugly and protracted legal battle with Twitter. The billionaire signed a legally binding agreement in April to buy the company for $54.20 a share, waiving due diligence to get the deal done quickly. The terms included a $1 billion breakup fee if the agreement fell apart and a clause that gives Twitter the right to sue Mr. Musk and force him to complete or pay for the deal, so long as the debt financing he has corralled remains intact.”

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

[youthathletics]

Interesting twitter thread, full disclosure...I have no idea where the legal terms of BOTS come in to play as it relates to 'potential' purchase of Twitter.

https://twitter.com/Most_Maximus/status ... HxArkmJ_SA

[Typical Lax Dad]

Interesting twitter thread, full disclosure...I have no idea where the legal terms of BOTS come in to play as it relates to 'potential' purchase of Twitter.

https://twitter.com/Most_Maximus/status ... HxArkmJ_SA

Some clown on the internet found that in 5 minutes but all of Elon’s high powered finance and law professionals didn’t get to it before he waived due diligence and entered into a binding agreement with a $1 billion break up fee…. Meanwhile in the real world, this is how it’s done:

https://www.huntsman.com/news/media-rel ... ttles-with

[Farfromgeneva]

I think Jack Dorsey might get dragged into problems from this as well. He was negotiating while on the board on behalf of musk.

[Typical Lax Dad]

I think Jack Dorsey might get dragged into problems from this as well. He was negotiating while on the board on behalf of musk.

For the “potential” acquisition of twitter, Musk must have meant to sign the “potential” Definitive Agreement and not the real Definitive Agreement:

https://mergersandinquisitions.com/defi ... uisitions/

I wonder if Musk will try to get out of paying ticking fees?

[Typical Lax Dad]

https://www.jdsupra.com/legalnews/insid ... n-6858160/

[a fan]

Interesting twitter thread, full disclosure...I have no idea where the legal terms of BOTS come in to play as it relates to 'potential' purchase of Twitter.

https://twitter.com/Most_Maximus/status ... HxArkmJ_SA

The argument being that Elon Musk----Elon Musk----- doesn't know what a bot is, and doesn't know that Twitter has them?

This whole thing is so stupid. I was listening to the wonks on CNBC this morning, and some were saying that twitter can't make material directional changes to the business while this stupid game is pending.

Basically, we've learned that Elon's word and handshake is sh*t, and is useless. That this was a toddler-impulse on his part, and he doesn't care if this costs people their jobs...which it surely will.

[Typical Lax Dad]

Interesting twitter thread, full disclosure...I have no idea where the legal terms of BOTS come in to play as it relates to 'potential' purchase of Twitter.

https://twitter.com/Most_Maximus/status ... HxArkmJ_SA

The argument being that Elon Musk----Elon Musk----- doesn't know what a bot is, and doesn't know that Twitter has them?

This whole thing is so stupid. I was listening to the wonks on CNBC this morning, and some were saying that twitter can't make material directional changes to the business while this stupid game is pending.

Basically, we've learned that Elon's word and handshake is sh*t, and is useless. That this was a toddler-impulse on his part, and he doesn't care if this costs people their jobs...which it surely will.

He did more than “shake hands”….

[ggait]

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

Not correct.

Musk only waived inspection prior to signing. Musk absolutely did not waive inspection between sign and close. His termination letter says that his post-signing/pre-closing inspection gives him the right to walk. So it comes down to whether Musk can actually prove in court material breach of warranty and/or MAE that voids the obligation to close/pay. From what's been published, seems like Musk's allegations are fairly weak and pretextual, but Del Chancery will decide that.

As seller counsel myself, I have pressured buyer to forget about the tedious and time consuming pre-signing due diligence in an effort to get the definitive agreement signed up ASAP. In a competitive auction situation, buyer will sometimes do that to secure the contract over other interested bidders. But in a public company acquisition agreement, target ALWAYS makes extensive reps and warranties. Including the massively expansive rep from seller (which is a public company) that all of its public SEC filings are true and not misleading. Twitter, of course, made exactly those kind of reps. Since those expansive reps are part of the binding agreement, Musk is absolutely entitled to rely upon them -- they are part of what he bargained for.

Waiving PRE-SIGNING due diligence is a tactical choice on the part of buyer -- you get speed and enhanced assurance of signing the binding contract at the cost of potentially not knowing what problems you may be walking into. Musk is now experiencing the cost of going without pre-signing due diligence. While he theoretically has a walk right under the contract, he can only walk and avoid the $1B break up fee or $42B deal if he convinces a judge of his position.

The whole situation reeks of Musk yanking Twitter around and the Twitter board (correctly) being very suspicious of Musk's intentions. Twitter initially told Musk to pound sand and adopted a poison pill to fend him off. Good call. They only negotiated with Musk when forced to do so. Musk waiving pre-signing due diligence is (in hindsight) a big red flag. If Musk was serious and committed to the deal, he would have taken his time and done his due diligence prior to signing. In the absence of a competing bidder, waiving pre-signing due diligence (which in many ways advantages seller) smacks of Musk carelessly securing an option to buy Twitter. Maybe he'll go through with it, or maybe he won't. We'll see how it goes between sign and close.

Another tell is the price -- $54.20. Which is a weed joke.

Last tell is that Twitter extracted a $1B break up fee from Musk. Break up fees are almost always something for the seller to pay. Most often if seller opts out of deal #1 in order to do a better deal #2 that arrives later (i.e. the fiduciary out). Twitter demanding and getting a buyer break up fee speaks volumes as to the extreme skepticism over whether Musk was serious.

The correct analogy would be this:

Seller represented in the contract that electrical was up to code. Buyer, relying on that rep, does not bother to check the electrical prior to signing. Post-signing but pre-closing, Buyer claims the electrical is bad and walks away. Seller says the electrical is actually good and seeks to keep the buyer's earnest money as a termination fee.

Twitter just hired Wachtell Lipton to handle the Del litigation. Now those guys are really the killers.

[Typical Lax Dad]

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

Not correct.

Musk only waived inspection prior to signing. Musk absolutely did not waive inspection between sign and close. His termination letter says that his post-signing/pre-closing inspection gives him the right to walk. So it comes down to whether Musk can actually prove in court material breach of warranty and/or MAE that voids the obligation to close/pay. From what's been published, seems like Musk's allegations are fairly weak and pretextual, but Del Chancery will decide that.

As seller counsel myself, I have pressured buyer to forget about the tedious and time consuming pre-signing due diligence in an effort to get the definitive agreement signed up ASAP. In a competitive auction situation, buyer will sometimes do that to secure the contract over other interested bidders. But in a public company acquisition agreement, target ALWAYS makes extensive reps and warranties. Including the massively expansive rep from seller (which is a public company) that all of its public SEC filings are true and not misleading. Twitter, of course, made exactly those kind of reps. Since those expansive reps are part of the binding agreement, Musk is absolutely entitled to rely upon them -- they are part of what he bargained for.

Waiving PRE-SIGNING due diligence is a tactical choice on the part of buyer -- you get speed and enhanced assurance of signing the binding contract at the cost of potentially not knowing what problems you may be walking into. Musk is now experiencing the cost of going without pre-signing due diligence. While he theoretically has a walk right under the contract, he can only walk and avoid the $1B break up fee or $42B deal if he convinces a judge of his position.

The whole situation reeks of Musk yanking Twitter around and the Twitter board (correctly) being very suspicious of Musk's intentions. Twitter initially told Musk to pound sand and adopted a poison pill to fend him off. Good call. They only negotiated with Musk when forced to do so. Musk waiving pre-signing due diligence is (in hindsight) a big red flag. If Musk was serious and committed to the deal, he would have taken his time and done his due diligence prior to signing. In the absence of a competing bidder, waiving pre-signing due diligence (which in many ways advantages seller) smacks of Musk carelessly securing an option to buy Twitter. Maybe he'll go through with it, or maybe he won't. We'll see how it goes between sign and close.

Another tell is the price -- $54.20. Which is a weed joke.

Last tell is that Twitter extracted a $1B break up fee from Musk. Break up fees are almost always something for the seller to pay. Most often if seller opts out of deal #1 in order to do a better deal #2 that arrives later (i.e. the fiduciary out). Twitter demanding and getting a buyer break up fee speaks volumes as to the extreme skepticism over whether Musk was serious.

The correct analogy would be this:

Seller represented in the contract that electrical was up to code. Buyer, relying on that rep, does not bother to check the electrical prior to signing. Post-signing but pre-closing, Buyer claims the electrical is bad and walks away. Seller says the electrical is actually good and seeks to keep the buyer's earnest money as a termination fee.

Twitter just hired Wachtell Lipton to handle the Del litigation. Now those guys are really the killers.

Thanks. Yes. My mistake. I used too crude an example. The whole episode never made much sense to me. We will see how much Mr. Musk’s impulsive behavior may cost him.

[Kismet]

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

Not correct.

Musk only waived inspection prior to signing. Musk absolutely did not waive inspection between sign and close. His termination letter says that his post-signing/pre-closing inspection gives him the right to walk. So it comes down to whether Musk can actually prove in court material breach of warranty and/or MAE that voids the obligation to close/pay. From what's been published, seems like Musk's allegations are fairly weak and pretextual, but Del Chancery will decide that.

As seller counsel myself, I have pressured buyer to forget about the tedious and time consuming pre-signing due diligence in an effort to get the definitive agreement signed up ASAP. In a competitive auction situation, buyer will sometimes do that to secure the contract over other interested bidders. But in a public company acquisition agreement, target ALWAYS makes extensive reps and warranties. Including the massively expansive rep from seller (which is a public company) that all of its public SEC filings are true and not misleading. Twitter, of course, made exactly those kind of reps. Since those expansive reps are part of the binding agreement, Musk is absolutely entitled to rely upon them -- they are part of what he bargained for.

Waiving PRE-SIGNING due diligence is a tactical choice on the part of buyer -- you get speed and enhanced assurance of signing the binding contract at the cost of potentially not knowing what problems you may be walking into. Musk is now experiencing the cost of going without pre-signing due diligence. While he theoretically has a walk right under the contract, he can only walk and avoid the $1B break up fee or $42B deal if he convinces a judge of his position.

The whole situation reeks of Musk yanking Twitter around and the Twitter board (correctly) being very suspicious of Musk's intentions. Twitter initially told Musk to pound sand and adopted a poison pill to fend him off. Good call. They only negotiated with Musk when forced to do so. Musk waiving pre-signing due diligence is (in hindsight) a big red flag. If Musk was serious and committed to the deal, he would have taken his time and done his due diligence prior to signing. In the absence of a competing bidder, waiving pre-signing due diligence (which in many ways advantages seller) smacks of Musk carelessly securing an option to buy Twitter. Maybe he'll go through with it, or maybe he won't. We'll see how it goes between sign and close.

Another tell is the price -- $54.20. Which is a weed joke.

Last tell is that Twitter extracted a $1B break up fee from Musk. Break up fees are almost always something for the seller to pay. Most often if seller opts out of deal #1 in order to do a better deal #2 that arrives later (i.e. the fiduciary out). Twitter demanding and getting a buyer break up fee speaks volumes as to the extreme skepticism over whether Musk was serious.

The correct analogy would be this:

Seller represented in the contract that electrical was up to code. Buyer, relying on that rep, does not bother to check the electrical prior to signing. Post-signing but pre-closing, Buyer claims the electrical is bad and walks away. Seller says the electrical is actually good and seeks to keep the buyer's earnest money as a termination fee.

Twitter just hired Wachtell Lipton to handle the Del litigation. Now those guys are really the killers.

Ironic that those same lawyers at Wachtell, Lipton, Rosen & Katz were one of the legal advisers for Musk's aborted plan to take Tesla private in 2018. Musk tweeted that there was "funding secured" for a $72 billion deal to take Tesla private but did not move ahead with an offer and subsequently dropped the entire plan.

They likely already know he's a lying sack and are sharpening knives to skewer him for a similar scam in 2022.

Twitter board's mistake was getting greedy and actually thinking he was going to pay an inflated $44B for the company. But they had no competing credible offers so they bailed on the poison pill and claimed that Musk's bid maximized shareholder value. Their problem was Musk had no intention of following through which they may have suspected but they couldn't say no to the deal.

[Farfromgeneva]

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

Not correct.

Musk only waived inspection prior to signing. Musk absolutely did not waive inspection between sign and close. His termination letter says that his post-signing/pre-closing inspection gives him the right to walk. So it comes down to whether Musk can actually prove in court material breach of warranty and/or MAE that voids the obligation to close/pay. From what's been published, seems like Musk's allegations are fairly weak and pretextual, but Del Chancery will decide that.

As seller counsel myself, I have pressured buyer to forget about the tedious and time consuming pre-signing due diligence in an effort to get the definitive agreement signed up ASAP. In a competitive auction situation, buyer will sometimes do that to secure the contract over other interested bidders. But in a public company acquisition agreement, target ALWAYS makes extensive reps and warranties. Including the massively expansive rep from seller (which is a public company) that all of its public SEC filings are true and not misleading. Twitter, of course, made exactly those kind of reps. Since those expansive reps are part of the binding agreement, Musk is absolutely entitled to rely upon them -- they are part of what he bargained for.

Waiving PRE-SIGNING due diligence is a tactical choice on the part of buyer -- you get speed and enhanced assurance of signing the binding contract at the cost of potentially not knowing what problems you may be walking into. Musk is now experiencing the cost of going without pre-signing due diligence. While he theoretically has a walk right under the contract, he can only walk and avoid the $1B break up fee or $42B deal if he convinces a judge of his position.

The whole situation reeks of Musk yanking Twitter around and the Twitter board (correctly) being very suspicious of Musk's intentions. Twitter initially told Musk to pound sand and adopted a poison pill to fend him off. Good call. They only negotiated with Musk when forced to do so. Musk waiving pre-signing due diligence is (in hindsight) a big red flag. If Musk was serious and committed to the deal, he would have taken his time and done his due diligence prior to signing. In the absence of a competing bidder, waiving pre-signing due diligence (which in many ways advantages seller) smacks of Musk carelessly securing an option to buy Twitter. Maybe he'll go through with it, or maybe he won't. We'll see how it goes between sign and close.

Another tell is the price -- $54.20. Which is a weed joke.

Last tell is that Twitter extracted a $1B break up fee from Musk. Break up fees are almost always something for the seller to pay. Most often if seller opts out of deal #1 in order to do a better deal #2 that arrives later (i.e. the fiduciary out). Twitter demanding and getting a buyer break up fee speaks volumes as to the extreme skepticism over whether Musk was serious.

The correct analogy would be this:

Seller represented in the contract that electrical was up to code. Buyer, relying on that rep, does not bother to check the electrical prior to signing. Post-signing but pre-closing, Buyer claims the electrical is bad and walks away. Seller says the electrical is actually good and seeks to keep the buyer's earnest money as a termination fee.

Twitter just hired Wachtell Lipton to handle the Del litigation. Now those guys are really the killers.

But the difference is you have a public company rep and warranties vs some dude w a house. All those public filings, CFO and CEO signing off on financials, etc. Absent MAC/MAE hed have to prove Twitter is a complete fraud and both the board, executive and SEC were effectively complicit. Good luck with that. And given Russia invaded Ukraine prior to agreement he can’t lean on that.

[a fan]

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

Not correct.

Musk only waived inspection prior to signing. Musk absolutely did not waive inspection between sign and close. His termination letter says that his post-signing/pre-closing inspection gives him the right to walk. So it comes down to whether Musk can actually prove in court material breach of warranty and/or MAE that voids the obligation to close/pay. From what's been published, seems like Musk's allegations are fairly weak and pretextual, but Del Chancery will decide that.

As seller counsel myself, I have pressured buyer to forget about the tedious and time consuming pre-signing due diligence in an effort to get the definitive agreement signed up ASAP. In a competitive auction situation, buyer will sometimes do that to secure the contract over other interested bidders. But in a public company acquisition agreement, target ALWAYS makes extensive reps and warranties. Including the massively expansive rep from seller (which is a public company) that all of its public SEC filings are true and not misleading. Twitter, of course, made exactly those kind of reps. Since those expansive reps are part of the binding agreement, Musk is absolutely entitled to rely upon them -- they are part of what he bargained for.

Waiving PRE-SIGNING due diligence is a tactical choice on the part of buyer -- you get speed and enhanced assurance of signing the binding contract at the cost of potentially not knowing what problems you may be walking into. Musk is now experiencing the cost of going without pre-signing due diligence. While he theoretically has a walk right under the contract, he can only walk and avoid the $1B break up fee or $42B deal if he convinces a judge of his position.

The whole situation reeks of Musk yanking Twitter around and the Twitter board (correctly) being very suspicious of Musk's intentions. Twitter initially told Musk to pound sand and adopted a poison pill to fend him off. Good call. They only negotiated with Musk when forced to do so. Musk waiving pre-signing due diligence is (in hindsight) a big red flag. If Musk was serious and committed to the deal, he would have taken his time and done his due diligence prior to signing. In the absence of a competing bidder, waiving pre-signing due diligence (which in many ways advantages seller) smacks of Musk carelessly securing an option to buy Twitter. Maybe he'll go through with it, or maybe he won't. We'll see how it goes between sign and close.

Another tell is the price -- $54.20. Which is a weed joke.

Last tell is that Twitter extracted a $1B break up fee from Musk. Break up fees are almost always something for the seller to pay. Most often if seller opts out of deal #1 in order to do a better deal #2 that arrives later (i.e. the fiduciary out). Twitter demanding and getting a buyer break up fee speaks volumes as to the extreme skepticism over whether Musk was serious.

The correct analogy would be this:

Seller represented in the contract that electrical was up to code. Buyer, relying on that rep, does not bother to check the electrical prior to signing. Post-signing but pre-closing, Buyer claims the electrical is bad and walks away. Seller says the electrical is actually good and seeks to keep the buyer's earnest money as a termination fee.

Twitter just hired Wachtell Lipton to handle the Del litigation. Now those guys are really the killers.

But the difference is you have a public company rep and warranties vs some dude w a house. All those public filings, CFO and CEO signing off on financials, etc. Absent MAC/MAE her hve to prove Twitter is a complete fraud and both the board, executive and SEC were effectively complicit. Good luck with that. And given Russia invaded Ukraine prior to agreement he can’t lean on that.

Fascinating stuff, fellas. Thanks for the insights.

[youthathletics]

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

Not correct.

Musk only waived inspection prior to signing. Musk absolutely did not waive inspection between sign and close. His termination letter says that his post-signing/pre-closing inspection gives him the right to walk. So it comes down to whether Musk can actually prove in court material breach of warranty and/or MAE that voids the obligation to close/pay. From what's been published, seems like Musk's allegations are fairly weak and pretextual, but Del Chancery will decide that.

As seller counsel myself, I have pressured buyer to forget about the tedious and time consuming pre-signing due diligence in an effort to get the definitive agreement signed up ASAP. In a competitive auction situation, buyer will sometimes do that to secure the contract over other interested bidders. But in a public company acquisition agreement, target ALWAYS makes extensive reps and warranties. Including the massively expansive rep from seller (which is a public company) that all of its public SEC filings are true and not misleading. Twitter, of course, made exactly those kind of reps. Since those expansive reps are part of the binding agreement, Musk is absolutely entitled to rely upon them -- they are part of what he bargained for.

Waiving PRE-SIGNING due diligence is a tactical choice on the part of buyer -- you get speed and enhanced assurance of signing the binding contract at the cost of potentially not knowing what problems you may be walking into. Musk is now experiencing the cost of going without pre-signing due diligence. While he theoretically has a walk right under the contract, he can only walk and avoid the $1B break up fee or $42B deal if he convinces a judge of his position.

The whole situation reeks of Musk yanking Twitter around and the Twitter board (correctly) being very suspicious of Musk's intentions. Twitter initially told Musk to pound sand and adopted a poison pill to fend him off. Good call. They only negotiated with Musk when forced to do so. Musk waiving pre-signing due diligence is (in hindsight) a big red flag. If Musk was serious and committed to the deal, he would have taken his time and done his due diligence prior to signing. In the absence of a competing bidder, waiving pre-signing due diligence (which in many ways advantages seller) smacks of Musk carelessly securing an option to buy Twitter. Maybe he'll go through with it, or maybe he won't. We'll see how it goes between sign and close.

Another tell is the price -- $54.20. Which is a weed joke.

Last tell is that Twitter extracted a $1B break up fee from Musk. Break up fees are almost always something for the seller to pay. Most often if seller opts out of deal #1 in order to do a better deal #2 that arrives later (i.e. the fiduciary out). Twitter demanding and getting a buyer break up fee speaks volumes as to the extreme skepticism over whether Musk was serious.

The correct analogy would be this:

Seller represented in the contract that electrical was up to code. Buyer, relying on that rep, does not bother to check the electrical prior to signing. Post-signing but pre-closing, Buyer claims the electrical is bad and walks away. Seller says the electrical is actually good and seeks to keep the buyer's earnest money as a termination fee.

Twitter just hired Wachtell Lipton to handle the Del litigation. Now those guys are really the killers.

But the difference is you have a public company rep and warranties vs some dude w a house. All those public filings, CFO and CEO signing off on financials, etc. Absent MAC/MAE her hve to prove Twitter is a complete fraud and both the board, executive and SEC were effectively complicit. Good luck with that. And given Russia invaded Ukraine prior to agreement he can’t lean on that.

Fascinating stuff, fellas. Thanks for the insights.

He certainly is tweeting as if he is already fully satisfied with how this ends. Maybe he is minimizing (potential) defeat or grabbing his ballz while throwing up the middle finger. In any event.....I echo afans comment.

[youthathletics]

Interesting twitter thread, full disclosure...I have no idea where the legal terms of BOTS come in to play as it relates to 'potential' purchase of Twitter.

https://twitter.com/Most_Maximus/status ... HxArkmJ_SA

The argument being that Elon Musk----Elon Musk----- doesn't know what a bot is, and doesn't know that Twitter has them?

This whole thing is so stupid. I was listening to the wonks on CNBC this morning, and some were saying that twitter can't make material directional changes to the business while this stupid game is pending.

Basically, we've learned that Elon's word and handshake is sh*t, and is useless. That this was a toddler-impulse on his part, and he doesn't care if this costs people their jobs...which it surely will.

He certainly knew what a BOT was, no need to minimize it to that level. I think (quantity of)BOT's over-inflate the value, which is a leverage point of the deal. LIke buying a distallary that claims they have 500 barrels of bourbon in their dunnage, you take their work for it, then realize 40% of those barrels are empty....you walk, they lied.

Handshakes are sh!t when attorneys get involved, unless they both are attorney's... , then you'll have to make sure there is not a knife about to stab you in the back during the bro-hug.

[ggait]

Musk was pledging large amounts of Tesla stock to finance the Twitter deal.

By walking away from twitter, musk removes the overhang on Tesla stock. So he likely makes billions on Tesla by blowing off twitter.

Also recall that musk has a 10% stake in Tesla. If he dumps that into the market, twitter is further screwed. So I wouldn’t be surprised if musk’s existing stake will be part of the inevitable settlement. Maybe Elon pays a termination fee and twitter uses that cash to buy his shares back.

[a fan]

He certainly knew what a BOT was, no need to minimize it to that level. I think (quantity of)BOT's over-inflate the value, which is a leverage point of the deal. LIke buying a distallary that claims they have 500 barrels of bourbon in their dunnage, you take their work for it, then realize 40% of those barrels are empty....you walk, they lied.

Sure, but that's not what he's doing, is it?

In other words: where's the document that Musk has that show that 40% of the barrels were empty?

He doesn't have this document. If he did? We all know he'd tweet it to the world, and twitter would walk away from the deal.

If you stuck a microphone under his mouth and ask "what percentage of twitter accounts are bots, and show us how you arrived at this number"? He wouldn't have an answer

Because he made it up. Of course he did.


BTW---you'll likely find this interesting. If you buy barrels of whiskey from a distillery as an independent bottler? You're buying barrels, sight unseen. And some of these barrels will have bled out.....totally empty. Part of the business. Crazy, right? Because for the big distillers, they have millions of barrels on site, and there's no way to check if they've leaked-out over 4-15 years of maturation.

So you can buy 1000 barrels, and 2 or 3 can be bone dry.

[Seacoaster(1)]

So that the layman can understand….Musk agreed to buy a house and waived inspection and a financing contingency…..the house may turn out to not have the electrical up to code and has a bad foundation.

Not correct.

Musk only waived inspection prior to signing. Musk absolutely did not waive inspection between sign and close. His termination letter says that his post-signing/pre-closing inspection gives him the right to walk. So it comes down to whether Musk can actually prove in court material breach of warranty and/or MAE that voids the obligation to close/pay. From what's been published, seems like Musk's allegations are fairly weak and pretextual, but Del Chancery will decide that.

As seller counsel myself, I have pressured buyer to forget about the tedious and time consuming pre-signing due diligence in an effort to get the definitive agreement signed up ASAP. In a competitive auction situation, buyer will sometimes do that to secure the contract over other interested bidders. But in a public company acquisition agreement, target ALWAYS makes extensive reps and warranties. Including the massively expansive rep from seller (which is a public company) that all of its public SEC filings are true and not misleading. Twitter, of course, made exactly those kind of reps. Since those expansive reps are part of the binding agreement, Musk is absolutely entitled to rely upon them -- they are part of what he bargained for.

Waiving PRE-SIGNING due diligence is a tactical choice on the part of buyer -- you get speed and enhanced assurance of signing the binding contract at the cost of potentially not knowing what problems you may be walking into. Musk is now experiencing the cost of going without pre-signing due diligence. While he theoretically has a walk right under the contract, he can only walk and avoid the $1B break up fee or $42B deal if he convinces a judge of his position.

The whole situation reeks of Musk yanking Twitter around and the Twitter board (correctly) being very suspicious of Musk's intentions. Twitter initially told Musk to pound sand and adopted a poison pill to fend him off. Good call. They only negotiated with Musk when forced to do so. Musk waiving pre-signing due diligence is (in hindsight) a big red flag. If Musk was serious and committed to the deal, he would have taken his time and done his due diligence prior to signing. In the absence of a competing bidder, waiving pre-signing due diligence (which in many ways advantages seller) smacks of Musk carelessly securing an option to buy Twitter. Maybe he'll go through with it, or maybe he won't. We'll see how it goes between sign and close.

Another tell is the price -- $54.20. Which is a weed joke.

Last tell is that Twitter extracted a $1B break up fee from Musk. Break up fees are almost always something for the seller to pay. Most often if seller opts out of deal #1 in order to do a better deal #2 that arrives later (i.e. the fiduciary out). Twitter demanding and getting a buyer break up fee speaks volumes as to the extreme skepticism over whether Musk was serious.

The correct analogy would be this:

Seller represented in the contract that electrical was up to code. Buyer, relying on that rep, does not bother to check the electrical prior to signing. Post-signing but pre-closing, Buyer claims the electrical is bad and walks away. Seller says the electrical is actually good and seeks to keep the buyer's earnest money as a termination fee.

Twitter just hired Wachtell Lipton to handle the Del litigation. Now those guys are really the killers.

Thanks for this; great explanation. This, if the litigation happens, really will be Sport of Kings-level M&A litigation.

[youthathletics]

He certainly knew what a BOT was, no need to minimize it to that level. I think (quantity of)BOT's over-inflate the value, which is a leverage point of the deal. LIke buying a distallary that claims they have 500 barrels of bourbon in their dunnage, you take their work for it, then realize 40% of those barrels are empty....you walk, they lied.

Sure, but that's not what he's doing, is it?

In other words: where's the document that Musk has that show that 40% of the barrels were empty?

He doesn't have this document. If he did? We all know he'd tweet it to the world, and twitter would walk away from the deal.

If you stuck a microphone under his mouth and ask "what percentage of twitter accounts are bots, and show us how you arrived at this number"? He wouldn't have an answer

Because he made it up. Of course he did.


BTW---you'll likely find this interesting. If you buy barrels of whiskey from a distillery as an independent bottler? You're buying barrels, sight unseen. And some of these barrels will have bled out.....totally empty. Part of the business. Crazy, right? Because for the big distillers, they have millions of barrels on site, and there's no way to check if they've leaked-out over 4-15 years of maturation.

So you can buy 1000 barrels, and 2 or 3 can be bone dry.

I doubt he made it up, speculating that he already knew the answer.