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Chancery courts will compel performance of this transaction absent a showing of an material adverse advent. Very, very high bar. The buyer is a highly sophist
by partloyaldemon 4y ago
Chancery courts will compel performance of this transaction absent a showing of an material adverse advent. Very, very high bar. The buyer is a highly sophisticated investor and the grounds that he is alleging form the basis of the breach of contract were and are public information that has not materially changed nor been alleged to have materially changed since the signing of the merger agreement. Moreover, and most critically, it is not being alleged that spam accounts have any substantial impact on the earnings of Twitter. Thus, the courts will obligate Musk to buy the business as he agreed to in April.
- icedchai 4y agoYou may be correct, but if you think Musk will actually buy Twitter at 54.20 now, I have a bridge to sell you. He can pay enough lawyers to hold up this transaction for years. "Time kills all deals", as they say.
- rafiki6 4y agoYes, but even if they take him to court, it's highly likely that Musk and his legal team drag this out. It's not going to be a simple case. No contract law case ever is. And at that point, Twitter's business might keep suffering, to the point that their fair market value plummets, and they enter a very difficult financial situation. Then Musk can swoop in with a much lower price offer and they will accept simply due to their financial position and not being able or willing to continue the case in the courts. I think Musk will end up buying Twitter but at a much lower price.
- zackees 4y agoMusk stated that 50% of the users are bots and that Twitter is hiding this. If true, he’s got an out.
- stingraycharles 4y agoI actually have experience with this type of stuff, some business tried to acquire mine and kept postponing, and ended up with some excuse that there wasn’t enough technical design documentation, which would be a real-breaker. It wasn’t super big money, but also not small (high 6-figures). I ended up suing them, won on all counts, and the deal had to go through. Unfortunately, this company simply refused to do that even after the judge ruled against them, and I had to renegotiate the terms set by the judge. That was one hell of a ride. Point being, if Musk really doesn’t want it, even if Twitter wins a lawsuit, Musk will probably find another way to postpone or renegotiate or whatever. In the meantime, Twitter is not in a good shape, and this whole thing is probably hurting them so much more than that they could possibly benefit from.
- synu 4y agoWhat happened when they ignore dthe order from the judge? Nothing?
- nabla9 4y agoIf he willfully disobeyed, there will be sequestration order against his assets. The court will appoint someone else to go trough his assets and find a way to pay. Selling Tesla stocks for example.
- giansegato 4y agoHow could they refuse after being compelled by a court ruling? Did they appeal / sue you back? Can't see how they could simply say... "no".
- carom 4y agoWhen you have a judgement you can send it to collections, but often people just don't pay these things. It's really hard to collect for even small things like evictions.
- dctoedt 4y ago> send it to collections When my now-adult son was in high school, he had a summer job working as a moving man for a friend's dad's company. The company had a contract with the local constable's office. One of my son's and his friend's assignments was to drive a truck around to the offices of a very-big shopping mall and to meet a constable to collect a seven-figure court judgment that hadn't been paid. The constable, my son, and his friend walked into the management office; the constable presented the writ of execution of the judgment, and my son and his friend started unplugging and loading up office equipment and furniture to be hauled off and sold at auction. The manager said "Wait, wait"; a hour later, a cashier's check arrived for the amount of the judgment.
- BellLabradors 4y ago
- suzzer99 4y agoDo they always have the option of settling at any point in the process? Like if Musk said "$20 billion penalty but I don't buy the company", I assume they'd say yes? (Or substitute a bigger number if not.) So are they just negotiating at this point if Musk has a penalty number he's willing to pay?
- jonathankoren 4y agoTwitter and Musk already agreed to a 1 billion dollar penalty. He’s trying to get out of it, even though he already waved due diligence.
- cookingrobot 4y agoThe $1B scenario doesn’t apply here. He’s on the hook for $44B.
- petesergeant 4y agoDo you have a simple and short explanation for why?
- kgwgk 4y agoThe $1bn is in case something else makes the closing impossible (a regulatory decision, for example).
- saalweachter 4y agoBecause taking a corporation private is a pain in the ass. Elon Musk signed a contract giving himself essentially no ability to back out, to force Twitter to consider his offer.
- deleted 4y ago[deleted]
- achow 4y ago
- JumpCrisscross 4y agoA feature of modern finance is the blockbuster leveraged buyout signed right before the market crashes: RJR Nabisco in 1989, Hilton and Harrah's in 2006. Now Twitter, in 2022.
- hef19898 4y agoPorsche and VW in 2008 if memory serves well. Almost ruined Porsche. Or Schaeffler and Conti, which almost ruined Schaeffler, a private company at the time.
- JshWright 4y agoIt's almost like these things happen pretty regularly, so it's easy to find examples that correlate...
- JumpCrisscross 4y agoThere is a documented negative effect on returns with private equity deal size. Record-setting leverage really only happens after prolonged low volatility twinned to easy money.
- nl 4y agoThe Porsche/VW thing was complicated by a short squeeze, not the financial crisis.
- hef19898 4y agoThe short squeeze was an effect of two things (too lazy to look up the details now): Porsche having funding issues and tye complicated share structure of VW, the short squeeze affected the class B(?, those with limited voting power) of VW. Without the financial crisis, Porsche could have easily financed the take over. It was incredibly risky so. And the attemot was partially driven by a feud between the Porsche and Piech branches of the Porsche family tree, with the latter "represebting" VW. All that does is show us that high stakes decisions should never be taken based on "personal" issues.
- postmeta 4y agoTwitter even admitted to overcounting its users: https://techcrunch.com/2022/04/28/twitter-says-it-overcounted-its-users-over-the-past-3-years-by-as-much-as-1-9m/ https://techcrunch.com/2022/04/28/twitter-says-it-overcounte...
- bagels 4y agoBy 1%, and they corrected it?
- yunohn 4y agoThis whole article and their filings avoid using percentages, specifically because it’s misleading at their size. Absolute numbers make more sense. Regardless, “this is not the first time Twitter reported erroneous metrics around users” is the problem with them.
- cloutchaser 4y agoI don't think Elon is trying to get out of it, he's got 2 goals: 1. Buy more time until stock market (i.e. Tesla shares) recover 2. Renegotiate the price Either one will probably mean he goes through with the deal. If he is under litigation for a year so be it, once the stock market recovers he's sacrificing a lot less of tesla to buy it. It's a big IF though. If the US recession gets really bad and the Fed stops interest rate hikes, the market could recover very quickly. But equally if Powell wants to go the Volcker route, Elon is fucked probably, the market won't recover for years. And in the meantime Elon's reputation I think is taking a massive hit. And I think a lot of his new political allies on the free speech side will be extremely disappointed. He might end up with no friends on either side. So he is taking a big risk here.
- hansword 4y ago> buy more time until Tesla shares recover The problem is that Tesla is massively over-inflated and Musk knows it and many people believe that was actually the reason for the whole twitter thing (Musk converting overinflated Tesla shares to fair-market value Twitter shares). With Tesla very likely losing the 'biggest EV maker' title to Volkswagen by the end of the year, it here has to be some sleight-of-musk for TSLA to recover.
- jfk13 4y ago> With Tesla very likely losing the 'biggest EV maker' title Since you mention it... https://uk.pcmag.com/cars-auto/141332/tesla-is-no-longer-the-worlds-biggest-electric-vehicle-producer https://uk.pcmag.com/cars-auto/141332/tesla-is-no-longer-the...
- hansword 4y agoYeah, but this is only half-true. BYD produces as much hybrids as full-EVs, so Tesla is still the biggest maker of full EVs. What I was saying: If you extrapolate year-over-year sales of full EVs, Volkswagen will likely sell more full EVs than TSLA sometime this year.
- cryptica 4y ago
- encryptluks2 4y agoNot how it works... discovery is limited to the terms of the contract, not whatever mission they want to go on. Censorship isn't illegal. Anti-competitive behavior isn't even part of the allegations.
- cryptica 4y ago
- woofyman 4y ago//Censorship is illegal because free speech is protected by the first amendment Only when the Government censors. The 1st amendment doesn’t apply to private individuals.
- hef19898 4y agoNot sure how often it has to be explained, but the first ammendment and similar provisions in other countries only apply to the government, they do not apply to businesses.
- goto11 4y agoIs censorship via algorithms illegal? Doesn't all social media platforms do that?
- oxff 4y agoThis is going to be one of those HN posts that will not age well, isn't it
- swores 4y agoMuch easier to say of any single specific guess/prediction when there are lots of possible outcomes, than to actually guess the right one.
- formercoder 4y agoYeah especially with his filing saying he’s waiving BDD. That’s a tough one to escape. He’s claiming that Twitter has made a material misstatement on their public filings. I’m sure that disclosure has been heavily diligenced.
- hef19898 4y agoWorst case there are some wrong statements in Twitters fillings. Thise have to be incredibly severe to have an impact on Musk's obligation to purchase Twitter. A simple filing error or mistake is most likely not enough.
- ekianjo 4y ago> Thus, the courts will obligate Musk to buy the business as he agreed to in April. That last statement does not follow everything else before. Courts have no power to do that.
- CogitoCogito 4y agoWell the court could obligate Musk to pay damages. One (simplistic) possibility might be to take the value Musk agreed to pay minus the current value of Twitter and force Musk to pay that. Then in theory Twitter would have received same value in the end.
- jsiepkes 4y agoWhy wouldn't courts have the power to do that? If the court rules you have no grounds to terminate the contract then you will have to execute the contract as originally agreed upon.
- drexlspivey 4y agoCan they force all the banks that agreed to loan them money to go through with it?
- HWR_14 4y agoAs long as Musk has ~40 billion of Tesla stock and can get ~20 billion additional dollars in cash (can get, not just has already), yes.
- Ensorceled 4y agoThey can force Musk to sell his other assets to complete the deal.
- ljlolel 4y agoThey can force his banks to sell enough Tsla shares to buy it
- colinmhayes 4y ago
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- rajnathani 4y agoIIRC there’s just a $1B penalty in the acquisition clause for Musk if the transaction doesn’t go through.
- paulcole 4y agoYou don’t remember correctly. The breakup fee is if an outside influence prevents the deal from going through. It’s not just for cases of “uh-uh i don’t wanna.”
- sk8terboi 4y ago
- johng 4y agoWhat if they have willfully misrepresented the amount of bots on the platform and lied about it to shareholders for years. MAUs are a big part of any social networks valuation metrics.
- ironlake 4y agoIt's a terrible contract: no due diligence, a specific performance clause. The only type of person who would ever sign a contract like that would be a dumb guy who got rich by accident.
- joshcryer 4y agoOr someone whose ego is so inflated and actions are on a whim due to being vastly rich that he just had a wild hair up his ass and said he'd buy Twitter. Remember, the Twitter buyout bullshit was after he'd done some shenanigans failing to report buying Twitter shares. People complained (on Twitter no less) and he literally went "oh well I'll just buy Twitter then." Egg on face now that he's seen just how utterly insane his proposal was.
- sterlind 4y agoMusk really strikes me as bipolar or something, and that he agreed to buy Twitter in a manic episode and now the party's over.
- HarHarVeryFunny 4y agoI believe the agreement between Twitter and Musk had a $1B acquisition cancellation clause built into in, so if Musk can't successfully argue for breach of contract he'll have to pay this $1B break-up fee, rather than be forced to complete the purchase.
- softwaredoug 4y agoThat’d be a nice infusion of capital for Twitter. And maybe that’s the best case scenario outcome that they’re actually hoping for.
- papercrane 4y agoThe contract includes a specific performance clause, so it's not as simple as a $1B break up fee.