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My heart sank when I read your comment: why on earth would the board sue for specific performance!? But my reading of the statement in the tweet is that they pl

My heart sank when I read your comment: why on earth would the board sue for specific performance!? But my reading of the statement in the tweet is that they plan to sue for enforcement of the agreement which I believe means paying the agreed-upon penalty for backing out of the deal. I don’t at all read that statement as a plan to seek specific performance.

howinteresting 4y ago
The agreed-upon penalty is when both sides mutually back out of the deal. But right now Twitter's board thinks it can get a lot more out of Musk than just $1B, and my understanding is that the board is likely correct.
agrajag 4y ago
> closing the transaction on the price and terms agreed upon They're definitely suing for specific performance, and I'm not sure they really have any other option at this point. It would be by far in their best financial interest if they can force closing the sale, and Musk's objections seem really thin. Doing anything less than that is complete capitulation I can see them reaching a settlement to agree to cancel the deal with Musk if he agrees to pay a significant penalty ($5B+), or maybe agree to reduce the purchase price some, but why not sue for specific performance if you think you'll win?
- elliekelly 4y ago
  Is his “financing secured”? It just seems like an incredible (and incredibly risky) long shot to me: a judge actually ordering a sale to an unwilling buyer (and Musk, of all buyers!) is a long shot and the big banks going through with funding such a big deal to an _unwilling_ owner is a long shot. But _even_if_ both of those two unlikely things happen what happens when the judge orders specific performance and Musk just... doesn’t? (Not usually a risk you have to factor in but with Musk I think this is absolutely a real possibility. Maybe even the most likely possibility.) Will they issue a warrant for his arrest? A daily fine for contempt? That would be the deal of the century for Musk. I don’t know the right answer when you’re dealing with a megalomaniac like Musk but I really don’t think specific performance is it. I am cautiously optimistic that whatever it is Musk is up to will eventually give rise to some cool new federal securities laws. Maybe even some new federal crimes! (Who am I kidding, a crime that only the wealthiest of the wealth would even be able to commit? Not in a million years!)
  - chernevik 4y ago
    Not a lawyer, but I expect that given a verdict a judge can and will attach assets to force compliance. The court could order Musk to sell Tesla shares to raise the necessary funds, and seize the shares to do so itself even if he won't.
  - humanwhosits 4y ago
    > A daily fine for contempt? Probably a large one. But if Tesla shares tank, and the other investors bail out, perhaps he just doesn't mechanically have the funds to do so.
    - lovich 4y ago
      When normal people agree to spend more than they have that normally ends up in bankruptcy and liquidating most assets other than a few exceptions. Obviously that won’t happen here because the rich have a different set of laws but on the surface he either has the assets to pay it off or would have to sell everything he had and start over
      - rkagerer 4y ago
        What specifically would prevent this?
        lovich 4y ago
        De jure? Nothing, as written the law applies equally to all. De facto? Just observe how often the rich are convicted for their crimes. Even in the rare cases that they are jailed, the severity of the sentence is usually much lower than the common man. Look at Musk himself, he already agreed to not tweet about tesla without the boards approval in an agreement with the SEC to avoid punishment, then routinely ignored it and just fought them in court until he won. Our system allows for anyone with enough money to run out the clock until they either win, the other side gives up, or the situation no longer matters and the case is dropped.
kgermino 4y ago
It’s not a penalty for backing out of the deal, it’s compensation if his financing falls through. Musk doesn’t have a discretionary out here.
tptacek 4y ago
Twitter will sue for specific performance because (a) they're entitled to it and (b) it's worth substantially more than the reverse breakup fee.
JauntTrooper 4y ago
Twitter has a binding agreement to get its shareholders cash at a price that’s nearly 50% higher than todays closing price, a value that the board concluded was superior to their standalone prospects and other alternatives. Why wouldn’t they enforce the agreement and close the deal?
- jimmydorry 4y ago
  Because it will takes years to enforce and in the meantime Twitter will have bad headlines and huge operational challenges? At best, they are likely to get the break-up clause which would not offset the damage such legal proceedings would cause over the duration of XX months.
  - rocqua 4y ago
    Running Twitter into the ground for 50 a share sounds like a great deal for shareholders. Heck, given the cesspool that Twitter is, it might even be good for society. It would suck for Musk and his financers, but they have a simple alternative: stick to the agreement they signed. It's not like the risks of merger agreements are unknown. And the waiving of due diligence wasn't a minor, easy to miss, point either. Musk wants to back out because of price. He cannot, and he is throwing the equivalent of a tantrum. I do hope this doesn't end up with Musk losing control of spaceX. Some actual quality is comming out of there.
    - DoesntMatter22 4y ago
      He's not going to have to buy twitter, it's that simple. He has multiple avenues of getting out of it.
      - Cederfjard 4y ago
        Such as?
        hef19898 4y ago
partloyaldemon 4y ago
They are absolutely suing to compel performance at the accepted price.
deleted 4y ago
[deleted]

howinteresting 4y ago

The agreed-upon penalty is when both sides mutually back out of the deal. But right now Twitter's board thinks it can get a lot more out of Musk than just $1B, and my understanding is that the board is likely correct.

agrajag 4y ago

> closing the transaction on the price and terms agreed upon They're definitely suing for specific performance, and I'm not sure they really have any other option at this point. It would be by far in their best financial interest if they can force closing the sale, and Musk's objections seem really thin. Doing anything less than that is complete capitulation I can see them reaching a settlement to agree to cancel the deal with Musk if he agrees to pay a significant penalty ($5B+), or maybe agree to reduce the purchase price some, but why not sue for specific performance if you think you'll win?

elliekelly 4y ago
Is his “financing secured”? It just seems like an incredible (and incredibly risky) long shot to me: a judge actually ordering a sale to an unwilling buyer (and Musk, of all buyers!) is a long shot and the big banks going through with funding such a big deal to an _unwilling_ owner is a long shot. But _even_if_ both of those two unlikely things happen what happens when the judge orders specific performance and Musk just... doesn’t? (Not usually a risk you have to factor in but with Musk I think this is absolutely a real possibility. Maybe even the most likely possibility.) Will they issue a warrant for his arrest? A daily fine for contempt? That would be the deal of the century for Musk. I don’t know the right answer when you’re dealing with a megalomaniac like Musk but I really don’t think specific performance is it. I am cautiously optimistic that whatever it is Musk is up to will eventually give rise to some cool new federal securities laws. Maybe even some new federal crimes! (Who am I kidding, a crime that only the wealthiest of the wealth would even be able to commit? Not in a million years!)
- chernevik 4y ago
  Not a lawyer, but I expect that given a verdict a judge can and will attach assets to force compliance. The court could order Musk to sell Tesla shares to raise the necessary funds, and seize the shares to do so itself even if he won't.
- humanwhosits 4y ago
  > A daily fine for contempt? Probably a large one. But if Tesla shares tank, and the other investors bail out, perhaps he just doesn't mechanically have the funds to do so.
  - lovich 4y ago
    When normal people agree to spend more than they have that normally ends up in bankruptcy and liquidating most assets other than a few exceptions. Obviously that won’t happen here because the rich have a different set of laws but on the surface he either has the assets to pay it off or would have to sell everything he had and start over
    - rkagerer 4y ago
      What specifically would prevent this?
      - lovich 4y ago
        De jure? Nothing, as written the law applies equally to all. De facto? Just observe how often the rich are convicted for their crimes. Even in the rare cases that they are jailed, the severity of the sentence is usually much lower than the common man. Look at Musk himself, he already agreed to not tweet about tesla without the boards approval in an agreement with the SEC to avoid punishment, then routinely ignored it and just fought them in court until he won. Our system allows for anyone with enough money to run out the clock until they either win, the other side gives up, or the situation no longer matters and the case is dropped.

kgermino 4y ago

It’s not a penalty for backing out of the deal, it’s compensation if his financing falls through. Musk doesn’t have a discretionary out here.

tptacek 4y ago

Twitter will sue for specific performance because (a) they're entitled to it and (b) it's worth substantially more than the reverse breakup fee.

JauntTrooper 4y ago

Twitter has a binding agreement to get its shareholders cash at a price that’s nearly 50% higher than todays closing price, a value that the board concluded was superior to their standalone prospects and other alternatives. Why wouldn’t they enforce the agreement and close the deal?

jimmydorry 4y ago
Because it will takes years to enforce and in the meantime Twitter will have bad headlines and huge operational challenges? At best, they are likely to get the break-up clause which would not offset the damage such legal proceedings would cause over the duration of XX months.
- rocqua 4y ago
  Running Twitter into the ground for 50 a share sounds like a great deal for shareholders. Heck, given the cesspool that Twitter is, it might even be good for society. It would suck for Musk and his financers, but they have a simple alternative: stick to the agreement they signed. It's not like the risks of merger agreements are unknown. And the waiving of due diligence wasn't a minor, easy to miss, point either. Musk wants to back out because of price. He cannot, and he is throwing the equivalent of a tantrum. I do hope this doesn't end up with Musk losing control of spaceX. Some actual quality is comming out of there.
  - DoesntMatter22 4y ago
    He's not going to have to buy twitter, it's that simple. He has multiple avenues of getting out of it.
    - Cederfjard 4y ago
      Such as?
      - hef19898 4y ago

partloyaldemon 4y ago

They are absolutely suing to compel performance at the accepted price.

deleted 4y ago

[deleted]