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Notice of termination of Twitter merger agreement

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Re: Notice of termination of Twitter merger agreement

#621

Post by FormerBandmate »

chernevik wrote: post #356
meragrin_ wrote: post #322

Earlier quoted context omitted.

> 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 con…

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 all…

It would be extremely hard to prove that Elon Musk, the richest man in the world who secured financing for the largest LBO ever in a week, was unable to secure financing because of a technicality in user data which played a key role in his stated rationale for the purchase. Unfortunately for Musk (lmao) and every Twitter employee (my heart actually goes out to them, with the current job market they’re in hell right now), I don’t think there’s any way out of this deal, especially when you look at past precedent like the LVMH-Tiffany’s and Simon-Taubman deals.

Re: Notice of termination of Twitter merger agreement

#622

Post by kbelder »

redeeman wrote: post #422
georgeecollins wrote: post #310

Earlier quoted context omitted.

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.

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.

I can't imagine it NOT being above 5%. I'd bet it's over 25%. But I am hoping real numbers come out of this.

Re: Notice of termination of Twitter merger agreement

#623

Post by cat_plus_plus »

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.

Re: Notice of termination of Twitter merger agreement

#624

Post by voisin »

spikels wrote: post #476
chernevik wrote: post #356

Earlier quoted context omitted.

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 all…

Twitter is demanding "specific performance" (i.e. complete the transaction) which is unrealistic given those financing provisions. No court can force all the other parties to close. No financing, no transaction.

Specific performance would apply to Musk as purchaser, not hypothetical lenders that aren’t party to the agreement. If he can’t find debt, then he would presumably have to liquidate more Tesla stock to pay the full price.

Re: Notice of termination of Twitter merger agreement

#625

Post by asvitkine »

FireBeyond wrote: post #558
redeeman wrote: post #422

Earlier quoted context omitted.

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.

Given that this is the numbers and methodology that Twitter has used for many years in SEC filings, Musk is implying that Twitter has been deceptive to its own investors and to the SEC for years. This isn't impossible, but it might require a little more than a page or two of vague accusations.

I suppose it's something that would be extensively argued in court if Twiiter decides to sue.

Re: Notice of termination of Twitter merger agreement

#626

Post by lettergram »

Hasu wrote: post #594
gfodor wrote: post #574

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.)

> 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…

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

Re: Notice of termination of Twitter merger agreement

#627

Post by deelowe »

aeternum wrote: post #599
tptacek wrote: post #93

Earlier quoted context omitted.

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 buy…

Instead of all this interpretation you're posting, why don't you post the actual language of the deal so people can decide for themselves?

> 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.

They posted an opinion, not interpretation... The part before the opinion as simply for context.

Re: Notice of termination of Twitter merger agreement

#628

Post by seanhunter »

chernevik wrote: post #264

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 par…

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.

Re: Notice of termination of Twitter merger agreement

#629

Post by Scarbutt »

DelaneyM wrote: post #525
beeboop wrote: post #376

Earlier quoted context omitted.

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

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. I…

which could easily rebound a bit by EOY.

By EOY we could be in recession.

Re: Notice of termination of Twitter merger agreement

#630

Post by JamesSwift »

redeeman wrote: post #422
georgeecollins wrote: post #310

Earlier quoted context omitted.

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.

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.

I guess its a good thing they very specifically didn't claim its <=5%, but instead claim "5% is a guess that we made with some specific asssumptions, but we also applied human judgement to classify bots and so it possibly is higher".
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