4 ms·

That's assuming it's a real offer. There is a very high chance that even if the board accepted the offer Elon would back out, which would be a mess that would h

by rurp 5y ago

That's assuming it's a real offer. There is a very high chance that even if the board accepted the offer Elon would back out, which would be a mess that would harm the company. It's clear that trolling is a big part of this (I would say the entire purpose). He doesn't even have funding lined up and doesn't have a real plan for how to run the company beyond vague aspirational statements.

vishnugupta 5y ago
> Elon would back out.... He doesn't even have funding lined up Can one just walk up to SEC and file an offer to buy out a company all-cash without showing some evidence of how they plan to arrange the money? Isn't there an entry barrier? Also, shouldn't there be a clause to penalise backing out? If not then one could toy around with the share prices as you say, no?
pclmulqdq 5y ago
That's not how this sort of thing works. Musk can't back out of this without paying a tremendous sum to the current shareholders. This isn't like a private company acquisition where there is an extended due diligence where anything can come up. He has very few options to cancel the purchase if it is accepted.
- tyrfing 5y ago
  You are incorrect. He made a non-binding offer contingent on a number of different conditions, such as obtaining financing, and with the ability to withdraw or modify it at any time, for any reason. Here is the filing: https://www.sec.gov/Archives/edgar/data/1418091/000110465922045641/tm2212748d1_sc13da.htm https://www.sec.gov/Archives/edgar/data/1418091/000110465922...
  - propogandist 5y ago
    that is standard boilerplate for these contracts, as I understand it. Why do you think any sane legal team would greenlight crafting a legal agreement to purchase a corporation for tens of billions without protective clauses?
  - pclmulqdq 5y ago
    The conditions under which the sale can fail to go through are enumerated in the document, and all of them are pretty much boilerplate. Practically speaking, Musk cannot back out unless there is a REALLY good reason that isn't enumerated in the offer. Here is the boilerplate: 1. Government approvals - self-explanatory. 2. "Confirmatory due diligence - making sure that Twitter isn't cooking the books or breaking the law (in an undisclosed way - if they have already told you they were breaking the law, that would not qualify). 3. The negotiation and execution of definitive agreements - writing the exact contract terms. 4. Completion of anticipated financing - I am assuming that some amount of the purchase is in the form of a leveraged buyout. This is about the due diligence of the lender, which is similarly restricted. As LVMH discovered recently in their purchase of Tiffany, it would literally take an event bigger than the pandemic to otherwise get out of a purchase of a public company.
    - tyrfing 5y ago
      > The Proposal is non-binding and, once structured and agreed upon, would be conditioned upon [...] > There can be no assurance that a definitive agreement with respect to the Proposal will be executed or, if executed, whether the transaction will be consummated... The Reporting Person reserves the right to withdraw the Proposal or modify the terms at any time including with respect to the amount or form of consideration. I think you're mistaking it for a deal that's much further along than it is, there is no binding agreement where Mr. Musk would have to pay penalties or anything like that for dropping the deal. An agreement reached as a result of this proposal would be, but that seems unlikely right now.
- mrtranscendence 5y ago
  Which makes it clear why this was such a lowball offer. IMO he never entertained the notion that his offer would be accepted. It was all a troll. 54.20 indeed.

by rurp 5y ago

vishnugupta 5y ago

> Elon would back out.... He doesn't even have funding lined up Can one just walk up to SEC and file an offer to buy out a company all-cash without showing some evidence of how they plan to arrange the money? Isn't there an entry barrier? Also, shouldn't there be a clause to penalise backing out? If not then one could toy around with the share prices as you say, no?

pclmulqdq 5y ago

That's not how this sort of thing works. Musk can't back out of this without paying a tremendous sum to the current shareholders. This isn't like a private company acquisition where there is an extended due diligence where anything can come up. He has very few options to cancel the purchase if it is accepted.

tyrfing 5y ago
You are incorrect. He made a non-binding offer contingent on a number of different conditions, such as obtaining financing, and with the ability to withdraw or modify it at any time, for any reason. Here is the filing: https://www.sec.gov/Archives/edgar/data/1418091/000110465922045641/tm2212748d1_sc13da.htm https://www.sec.gov/Archives/edgar/data/1418091/000110465922...
- propogandist 5y ago
  that is standard boilerplate for these contracts, as I understand it. Why do you think any sane legal team would greenlight crafting a legal agreement to purchase a corporation for tens of billions without protective clauses?
- pclmulqdq 5y ago
  The conditions under which the sale can fail to go through are enumerated in the document, and all of them are pretty much boilerplate. Practically speaking, Musk cannot back out unless there is a REALLY good reason that isn't enumerated in the offer. Here is the boilerplate: 1. Government approvals - self-explanatory. 2. "Confirmatory due diligence - making sure that Twitter isn't cooking the books or breaking the law (in an undisclosed way - if they have already told you they were breaking the law, that would not qualify). 3. The negotiation and execution of definitive agreements - writing the exact contract terms. 4. Completion of anticipated financing - I am assuming that some amount of the purchase is in the form of a leveraged buyout. This is about the due diligence of the lender, which is similarly restricted. As LVMH discovered recently in their purchase of Tiffany, it would literally take an event bigger than the pandemic to otherwise get out of a purchase of a public company.
  - tyrfing 5y ago
    > The Proposal is non-binding and, once structured and agreed upon, would be conditioned upon [...] > There can be no assurance that a definitive agreement with respect to the Proposal will be executed or, if executed, whether the transaction will be consummated... The Reporting Person reserves the right to withdraw the Proposal or modify the terms at any time including with respect to the amount or form of consideration. I think you're mistaking it for a deal that's much further along than it is, there is no binding agreement where Mr. Musk would have to pay penalties or anything like that for dropping the deal. An agreement reached as a result of this proposal would be, but that seems unlikely right now.
mrtranscendence 5y ago
Which makes it clear why this was such a lowball offer. IMO he never entertained the notion that his offer would be accepted. It was all a troll. 54.20 indeed.