3 ms·

It's a negotiating tactic, part of which is just stalling the deal. Musk will likely still buy Twitter, but for less. Happens all the time in sports when a play

It's a negotiating tactic, part of which is just stalling the deal. Musk will likely still buy Twitter, but for less. Happens all the time in sports when a player still has multiple years on his contract but threatens to hold out if the team won't negotiate a new, higher contract. Musk agreed to pay $54/share. But after the tech selloff, Twitter might be worth $25-30. Maybe less. Musk can, in fact, get out of the deal for $1 billion or so in fees. But that would be awful for Twitter too, it's stock would tank overnight without a bidder (it already dropped from $50+ to under $40 quite rapidly). So perhaps Musk can get the board to agree to a deal at around $32-35/share, it would be a win/win for both parties.

dmurray 4y ago
I've only been following this through Matt Levine, but he thinks Musk absolutely does not have the right to bail on the deal for $1 billion. This clause is only triggered if he can no longer find financing, which he can.
RayVR 4y ago
Your understanding of the deal is incorrect. The $1b is only an out in a few very restricted scenarios. Wanting out is not one of them.
- listenallyall 4y ago
  You're right, haven't been following closely. But let's say Musk just walks and it is in fact a contract violation. What is Twitter's recourse? Sure it can sue... and what? Spend years in court, more dirty laundry aired, stock price continues dropping, employees leaving, unlikely new buyers emerge. Twitter board could face lawsuits from public stockholders if they feel material information was hidden from them or misrepresented. What exactly were the damages Musk caused? Pumped up its stock price? It's not exactly like a labor or employment contract. How sure are you that Twitter would actually win in court? All I'm saying is that renegotiating the deal with Musk at a lower price is still likely Twitter's best option, regardless of the specific contract terms.

dmurray 4y ago

I've only been following this through Matt Levine, but he thinks Musk absolutely does not have the right to bail on the deal for $1 billion. This clause is only triggered if he can no longer find financing, which he can.

RayVR 4y ago

Your understanding of the deal is incorrect. The $1b is only an out in a few very restricted scenarios. Wanting out is not one of them.

listenallyall 4y ago
You're right, haven't been following closely. But let's say Musk just walks and it is in fact a contract violation. What is Twitter's recourse? Sure it can sue... and what? Spend years in court, more dirty laundry aired, stock price continues dropping, employees leaving, unlikely new buyers emerge. Twitter board could face lawsuits from public stockholders if they feel material information was hidden from them or misrepresented. What exactly were the damages Musk caused? Pumped up its stock price? It's not exactly like a labor or employment contract. How sure are you that Twitter would actually win in court? All I'm saying is that renegotiating the deal with Musk at a lower price is still likely Twitter's best option, regardless of the specific contract terms.