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Elon Musk asserts his “right to terminate” Twitter deal

• rurp 4y ago
  I literally can't imagine ever wanting to do business with Elon Musk. Matt Levine has written a lot about this deal and it sounds extremely clearcut that Elon is contractually committed. There is no "buyers remorse" or "lol, jk" clause in the deal. That said, I have a feeling he will weasel out with nothing more than a slap on the wirst, if even that. Twitter's board isn't exactly known for its competence and backbone, so I suspect it will back down if Elon yells and lies enough about whatever pretext he decides to use to back out of the deal.
  • samstave 4y ago
    Irrespective of anything regarding Musk, Shouldn't transparency and Truth be sought from Twitter. Full Stop. --- I recall when I interviewed there in ~2008?? Don't recall, and they asked me in the interview what I thought Twitter was: I stated "Twitter is a global sentiment engine thats able to take the pulse of users around the globe on any topic" I didn't get the job.
    • krapp 4y ago
      > Irrespective of anything regarding Musk, Shouldn't transparency and Truth be sought from Twitter. Full Stop. No. Twitter is not the press, nor is Twitter a public utility. Twitter is under no obligation to provide "Truth" or "transparency" to the public. It's a microblogging service, not the BBC. Full Stop.
      • aliswe 4y ago
        > It's a microblogging service, not the BBC. Full Stop. *publicly listed. so they need to be transparent as far as market information goes, while not disclosing corporate secrets or breaching personal data regulations. and the CEO said from the start that they cant disclose more details regarding their 5% assessment.
      • CommieBobDole 4y ago
        I think you're both right here - transparency and truth from Twitter should be sought, and they are under no obligation to provide it.
      • eloff 4y ago
        No, you're missing the fact that Twitter is a publicly traded company. If they knowingly provide false or misleading information in their filings, the SEC and likely the shareholders can go after them. It would be tricky to prove intent here, but there may be other risks. I'm not a lawyer.
      • _-david-_ 4y ago
        They cannot lie in certain documents since they are a public company.
  • polski-g 4y ago
    If Twitter was lying on their sec reports then yes the deal can certainly be terminated.
    • encryptluks2 4y ago
      The SEC reports says they estimate the bot daily active users (or something like that) to be 5%, but in fact could be much larger and it is merely an estimate. These leaves room for bot count to be much higher and they still would not have lied.
      • scotuswroteus 4y ago
        Go to the statement (10-Q I think) and you'll see caveats and conditional statements that are rather clear the estimate was not in anyway definitive or even methodologically sound. They said that. My man Elon is so focused on numbers that he doesn't read the fine print. Certainty intervals matter, even if they're described with words rather than numbers.
        • encryptluks2 4y ago
          Yeah, that is the part I'm referring to. Agreed, that if he read the fine print that he would be litigating this much differently, or at least in his public statements. From the change in strategy, it appears his lawyers are now just trying to claim that Twitter isn't providing some information... although, I'm not sure that they are required to verify any claims regarding bots based on their public filings.
          • JamesSwift 4y ago
            His lawyers are claiming a technicality in the contract, specifically there _is_ a clause that requires Twitter to service any "reasonable" request for information to Elon. Theres 2 important things to keep in mind when judging the violation however: 1) Requests for information are assumed to be to facilitate _closing the deal_. Its not just for any willy-nilly request he wants. 2) It specifically is not to service "due diligence". This is the "open for interpretation" part. The contract _separately_ calls out that Musk has had the opportunity to seek information for due diligence, and Twitter has already fulfilled those requests to his satisfaction. So with that in mind, I would interpret the obligation to service information to be limited to things e.g. related to acquiring financing, or to fill out paperwork etc.
  • sharken 4y ago
    I certainly expect him to pay the 1 billion dollars required for backing out, but of course he will try to avoid that. The real reason is that he can't afford to buy Twitter at the negotiated price, which is entirely on Musk.
    • BitwiseFool 4y ago
      Too bad Elon didn't wait a while longer, the market is dipping left and right.
    • Zigurd 4y ago
      There is a misapprehension about the breakup fee: It isn't at Musk's discretion that he can pay the fee and walk away. The breakup fee would be paid if the deal can't proceed for reasons outside Musk's control. That does not include wanting to argue due diligence matters, having waived dd.
  • liuliu 4y ago
    But Twitter's board has to fight, no? Elon is essentially accusing them providing fraudulent statements. If they admit as-is, it can open a massive door for other lawsuits.
    • gamblor956 4y ago
      No, they don't have to do anything except say, "We had a contract and you agreed to waive due diligence. Pay up." EDIT: pay up in this context probably means $1 billion, though given that he is the world's richest man, it could conceivably include specific performance of the contract (meaning going through with the deal).
      • birdyrooster 4y ago
        Elon has just been thrashing with the reality he is on the hook for $1B due to this stupid idea.
        • toomuchtodo 4y ago
          The problem is that Elon, for so long, has avoided the consequences of his actions that the thought of being held accountable to perform or pay the termination fee feels like oppression to him. Had he acted with integrity and honesty, he wouldn’t be in this situation of his own making, but those traits aren’t what made him wealthy.
        • mlyle 4y ago
          The $1B breakup fee isn't an option that Elon can exercise. See e.g. https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-away-from-twitter-deal-by-paying-1-billion.html https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...
      • rayiner 4y ago
        I would hesitate caution before assuming that “waiving due diligence” is a magic get out of jail free card. It’s rarely that simple in a contractual dispute.
      • 4y ago
  • legitster 4y ago
    The board may not have a backbone, but their legal team has blood in the water for a multi-billion dollar settlement. I don't see how this doesn't end with years of expensive litigation (barring a new agreement).
    • SilasX 4y ago
      Yeah, the updated link content says they plan to sue to enforce the original buyout terms: >>"Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," the company said in a statement. >>"We believe this agreement is in the best interest of all shareholders," it added. "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."
    • TheCoelacanth 4y ago
      There is no way Twitter can possibly back down unless they get a huge settlement from Musk or unless the share price goes way up. If they let him walk away, they would get sued by their own shareholders for losing them a ton of money.
  • thebradbain 4y ago
    Given that the SEC likely has a bone to pick with Elon for his other stunts, I wonder if they'd step in under their authority to make sure he doesn't get away with just a slap on the wrist. Not so much forcing him to go through with the sale, but use their soft power to ensure he pays the breakup fee. At this point the deal is as much politics (not left/right, but posturing between powerful institutions and individuals) as business, so anything could happen.
    • Majromax 4y ago
      The SEC has little to do with the legal merger agreement. That will be executed (or not) under Delaware corporate law.
  • bambax 4y ago
    Agreed on all counts. Matt Levine is a genius and one of the best writers ever, and Musk is a charlatan and a bully. > I literally can't imagine ever wanting to do business with Elon Musk. Never mind Twitter. Buying a car from that guy is really absurd and dangerous.
    • jonny_eh 4y ago
      This whole episode finally convinced me to sell my Tesla stock. I don't want anything to do with this clown.
    • rurp 4y ago
      > Never mind Twitter. Buying a car from that guy is really absurd and dangerous. Very true. I was rooting hard for Tesla to succeed a number of years ago, but these days there's no chance I would even consider buying one of their cars. A few people close to me own Teslas and I worry quite a bit about their safety. I really hope that Musk's absurd behavior lately opens some more eyes to just how reckless and irresponsible the company is.
• Zigurd 4y ago
  • thawaya3113 4y ago
    The Twitter board isn’t gonna make Elon do anything. They will settle the shareholder lawsuits (and probably make Twitter Inc. and therefore the shareholders themselves, pay for it). Because if they do anything Elon’s gonna threaten to make their lives miserable in many different ways. And they are all gonna fold. They didn’t become board members to protect shareholder rights. They became board members because it’s a cushy job that pays well for little work. And gives you some street cred. Getting into a fight with Elon threatens all of that. So yeah, Elon’s bullying and tantrum throwing will win again because the only entity that can fight back, the US govt, has decided for a few decades that it really shouldn’t be doing anything.
    • onetokeoverthe 4y ago
    • mikkergp 4y ago
      I fundamentally agree with you but I think a few things. 1. There's a small chance they fight because 10's of billions of dollars are at stake. 2. If they do fight I'm pretty sure they lose because I don't think a judge would want to force someone to do something they don't want to do like this, especially when that person is a billionaire. 3. It makes the future popcorn-eating amateur sports analysis in the future interesting(or less interesting?) on these kind of deals, because I think early on there was this sense that Elon Musk was taking this big risk by making a big offer and waving due diligence, and the reality is that risk doesn't work for billionaires the way it works for the rest of is. All this back and forth about the nuances of contract law end up irrelevant.
      • thebradbain 4y ago
        Re: point 2 – a judge wouldn't necessarily force him to carry out the deal, but the judge would likely force him to pay the $1bn breakup fee that is agreed to if he does not carry out the deal.
• yumraj 4y ago
  Déjà vu - "Am considering taking Tesla private at $420. Funding secured."
  • sigmoid10 4y ago
    That was merely a tweet. This time they've got him by the balls with a signed contract. It will be interesting to see if he can get out of this one so easily, because this whole drama will certainly end up in court.
    • zie 4y ago
      Not really, I mean worst case he has to pay Twitter 1B?. Which to us seems ridiculous, but for him it's like $1,000 might be to many of us, we would notice it, but it would likely not financially ruin us.
      • cellis 4y ago
        More like 20,000-200,000. to many of us, depending on phase of career and location.
        • Jyaif 4y ago
          1B = 0.5% of Elon's net worth. You are saying that "many of us" have a net worth in the 4m-40m range.
          • deleted 4y ago
            [deleted]
      • sushid 4y ago
        People keep stating that he can buy a $1B get out of jail card but AFAIK that's not true. He can only pay the breakup fee if he has financing concerns and/or regulatory reasons for not being able to close the deal. [0] [0] https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-away-from-twitter-deal-by-paying-1-billion.html https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...
• skadamat 4y ago
  I still think the underlying premise of Twitter's importance to the "public discussion" and "public square" isn't challenged enough. https://www.calnewport.com/blog/2022/05/03/the-real-problem-with-twitter/ https://www.calnewport.com/blog/2022/05/03/the-real-problem-... > The real outrage, I conclude, is not the details of how Elon Musk might change Twitter, but the fact that so many people in positions of power — politicians, business leaders, journalists — still pay so much attention to these 240-character missives. > “Twitter’s increasingly heated wrangling is not just far from a considered democratic debate,” I write, “but has truly become a spectacle driven by a narrow and unrepresentative group of elites.” Why do we care so much about what happens to Twitter?
  • scotuswroteus 4y ago
    Because it's a central node in a potential disinformation network that wields immense power over American elections. Should it? No. Is it pathetic that it is? Yes. But is vs. ought. It IS a powerful platform but ought not be.
    • jrockway 4y ago
      It's easy to blame Twitter for election misinformation, but getting rid of Twitter will never be the solution. The problem will keep showing up until we fix the root cause. (I'm certain that people were upset about the invention of the printing press for the same reason.) At some point, to have a functioning democracy, the populace has to be educated. Then when there's misinformation, they'll just ignore it. In the past, we've gotten around this by it being expensive to broadcast ideas to large numbers of people. You had to be a newspaper or TV network, and newspapers and TV networks employed people worried about their reputation, so nobody ever published op-eds about how Bill Gates is injecting us with 5G microchips or whatever. This weeded out quite a lot of conspiracy theories and whatnot. But the reality is that the Internet changed the calculus there; anyone can publish anything to a large number of people. With that floodgate open, there is no going back and we have to teach people to critically analyze what they hear on the Internet. It's the last line of defense. This means that all the bluster over Facebook and Twitter and free speech needs to translate to increased funding for schools, and that if we start right now it will probably take a couple generations to get to a better place. There is no quick fix to make democracy work, only hard work and time.
• phlhr 4y ago
  Are people purposely ignoring the fact that Twitter are clearly lying about the % of non-human users? They say its less then 5% but in reality its between 5% and 25% based on multiple independent research studies. If it really was < 5% why don't Twitter just release the data Musk is asking for?
  • mikkergp 4y ago
    This would be a great point if Musk hadn't waved due diligence. He knew this was a risk before he made the offer and now he's just posturing.
    • freediver 4y ago
      I think he didn't wave due dillegence, but his due dilligence was based on public filings that Twitter made, which may prove to be wrong.
      • mikkergp 4y ago
        I'm curious about the nuances of this, I haven't seen this argument made elsewhere yet, but it does seem to make sense that you would make that kind of exception. Even when you buy a house as-is, exceptions are generally going to be made for existential threats (leans on the house, title issues, etc.) outside of the _condition_ of the house. But it still feels like posturing, especially since he knew this was an issue before he made the offer, why not explicitly call this out in the contract? It definitely feels like the weight of the economy collapsing is the substantive issue.
      • JamesSwift 4y ago
        No, the SEC agreement directly addresses this. Section 5.11 ("Parent" and "Acquisition Sub" is Musk, "Company" is Twitter): > Each of Parent and Acquisition Sub has conducted, to its satisfaction, its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and its Subsidiaries. In making its determination to proceed with the transactions contemplated by this Agreement, including the Merger, each of Parent and Acquisition Sub has relied solely on the results of its own independent review and analysis and the covenants, representations and warranties of the Company contained in this Agreement So, in essence: 1) Musk has been afforded the opportunity to address any concerns he has with Twitter 2) Any concerns of Musks have been satisfactorily resolved by Twitter 3) In determining said satisfaction, Musk is relying on his own judgement and analysis, and is not relying on any analysis by Twitter. There is absolutely 0 ground to his complaints today and claiming he "isnt being given the information hes been asking for" or that "I was going off your numbers but I want to run my own".
• shrubble 4y ago
  The part that seems dangerous to Twitter is not the go/no-go part of Elon Musk's offer , but the possible shareholder and advertising related lawsuits that may arise. Representing bot activity as less than 5% but using a sample size of 100, when you are claiming millions of active accounts, can't easily be seen as honest. Since statistics which Twitter is expected to know as a matter of their duty to shareholders , makes it plain that the sample size is too small. Too many bots = shareholders were misled as to true number of active accounts. Too many bots = advertisers were misled as to potential reach.
  • snowwrestler 4y ago
    Everything about the bots is a side show to the merger. Twitter’s assertions about bots are in SEC filings and they are a publicly traded company. If there is a cause of action, it already exists and has nothing to do with Musk’s bid. As for that bid, the time for due diligence is before, not after, one signs the merger agreement. FWIW I have shares in Twitter and would prefer them to remain a publicly traded company.
    • kjksf 4y ago
      <5% bots is a material statement that Twitter made that appears to be false. It's very much related to the bid. If you materially mis-represent your company then it's a valid reason to scrap the deal. > As for that bid, the time for due diligence is before, not after, one signs the merger agreement. That's not how it works. Try calling Twitter: "I'm doing due diligence on you guys, could you open your books to me"? They'll laugh at you and hung up. The agreements is a pre-requisite of doing what "due diligence" means in this context. "Due diligence" specifically involves looking at things that you're typically not allowed to looked at. Things like auditing financials of the company, doing an audit of the source code, proprietary technology etc. It requires the company being acquired to share a lot of proprietary information. The agreement, which includes $1 billion breakup clause, is necessary to filter out people who are not serious.
      • syspec 4y ago
• fxtentacle 4y ago
  Doesn't it make financial sense for him to pay the 1bn breakup fee in order to avoid overpaying by 15bn w.r.t. the current stock price?
  • dawnerd 4y ago
    Makes more financial sense to try to weasel out and say Twitter lied therefore the whole agreement is tossed out. This is Musk we're talking about.
  • elil17 4y ago
    The breakup fee isn’t an option he can just use when he pleases. It’s only there as a fee he pays if outside forces prevent the deal from closing.
  • drexlspivey 4y ago
    When the offer was announced most HN commenters speculated that the twitter board will never accept the $54.2 price because it was too low. They said that the fundamental value of the company was much higher since it was trading in the 70s only a few months prior. If the deal falls apart now the share price might fall into the 20s.
  • benjaminwootton 4y ago
    In hindsight, some kind of clause about the market valuation moving by X% might have been a good idea. Not sure how you would contract for that, but the actual value of the asset has significantly declined.
    • JumpCrisscross 4y ago
      > some kind of clause about the market valuation moving by X% might have been a good idea Collars are not uncommon in M&A agreements. Diligence clauses, far more common. Neither made it into the final agreements negotiated in this case. Hence the drama.
      • benjaminwootton 4y ago
• dubswithus 4y ago
  While this drama goes on Twitter should suspend Elon's account. Play hardball.
  • dragontamer 4y ago
    Why? With as obnoxious as Elon Musk has been on his Twitter account, it is far more likely that Elon Musk is providing the Twitter-lawyers with plenty of examples for their inevitable court case. Ex: Elon Musk needs to explain his "I don't care about the financials of this deal" statement to a jury, or "Single most annoying problem on Twitter" tweets. https://twitter.com/elonmusk/status/1511230314902953984 https://twitter.com/elonmusk/status/1511230314902953984 ---------- When you have an obnoxious dude making public statements, lawyers want them to make _more_ statements, not fewer statements.
    • dubswithus 4y ago
      Elon is obsessed with using Twitter. That's why he wants to buy it. It's a tactic to force him to concede.
      • dragontamer 4y ago
        > That's why he wants to buy it. Legally speaking, this letter from his lawyers state the opposite. Elon Musk is trying to call off the deal and __NOT__ buy Twitter.
• Overtonwindow 4y ago
  Is it possible Twitter is deliberately sabotaging the sale to Musk?
  • Geee 4y ago
    That's my reading of the situation. But, probably both Elon and Twitter want to cancel. Elon would in principle like to buy, but the timing was unfortunate, and the offered price is now too expensive.
  • superfrank 4y ago
    I don't know enough about the deal to use the term "sabotaging", but a bit of hardball is to be expected during a hostile takeover and it feels to me like Musk wasn't prepared for that.
  • BudaDude 4y ago
    Probably. They already tried to once
  • anotherman554 4y ago
    Twitter wouldn't have agreed to the sale if they didn't want to sell. I think it's more likely Musk is making up reasons to back out of the deal .
  • klyrs 4y ago
    What did they do to sabatoge the deal, after the ink dried? To me, it looks like elon is attempting a shakedown to either ruin twitter altogether, or devalue it enough so he can afford to purchase it without tanking Tesla.
• replyifuagree 4y ago
  I predict twitter's board blinks and sells at <40 bucks a share, then Musk settles a bunch of shareholder lawsuits for pennies on the discount he negotiated.
• sydthrowaway 4y ago
  I would love if it was Twitter that sent Elon to the poor house
  • CobrastanJorji 4y ago
    Even if Elon Musk somehow personally lost $200 billion on this $30 billion deal, he'd still be one of the richest 100 people in the world.
    • dubswithus 4y ago
      That assumes that Tesla's stock valuation is rock solid going forward.
    • ForHackernews 4y ago
      Most of his wealth is tied up in Tesla and SpaceX shares, and those investors don't seem thrilled with his Twitter distraction.
  • JaceLightning 4y ago
    I was hoping for the opposite: musk would finally destroy Twitter
    • likeafox 4y ago
      Porque no los dos?
    • dekerta 4y ago
      I'm hoping they destroy eachother
• outside1234 4y ago
  Its true - he can cancel whenever he wants. Just needs to write a $1B check.
  • jonny_eh 4y ago
    Actually not true, the $1B is if he's "prevented" from buying Twitter.
  • anotherman554 4y ago
    This is not true. I've read Matt Levine's write up on the deal. Twitter can sue him and demand he go through with the purchase.
• outside1234 4y ago
  Honestly, I hope Twitter sticks to their guns and forces him to pay the breakup or buy the company. Enough with the Billionaires ignoring contacts when they aren't convenient to them.
• smiddereens 4y ago
• thumbsup-_- 4y ago
  he is having sweaty hands now
• jbigelow76 4y ago
• emerged 4y ago
  [dead]
• malshe 4y ago
  From Matt Levine's column: "One possibility is that Musk will keep sending nasty letters and tweets about bots, and the people — including the ones working for him — whose job it is to get the deal done will keep working to get the deal done, and one day Musk will be mid-sentence typing a nasty tweet about Twitter and find out that he owns it."
• deleted 4y ago
  [deleted]
• DonnyV 4y ago
  I can't believe now people are wondering if social media traffic is mostly bot driven. Social media and really any online ad company are the only companies that make money off the stats only they have access too and provide. Their ad prices are based on these numbers. Its kinda crazy this has been a thing for so long. Even bill board ad effectiveness can be checked by third partys. You can look at traffic stats on the road, seasonal spikes if near a beach town, weather effects, etc. There are NO certified valid third party check on any of these social media services. Billions of dollars getting funneled into these online ads and no one knows how much of the data is even real.....crazy.
• idlespectator 4y ago
  <fantasy-moment> I wonder if this will ruin him financially, and then we’ll stop hearing from him. </fantasy-moment>