4 ms·

No. The $1B clause does not involved the two contractual parties pulling out of the deal.

jollybean 4y ago
? It's my understanding that if Musk walks, he's supposed to pay $1B and visa versa. So he's using the 'bot' issue to find an excuse for a deal he wants out of. [1] https://www.cbc.ca/news/business/elon-musk-twitter-1.6432315 https://www.cbc.ca/news/business/elon-musk-twitter-1.6432315
- imustbeevil 4y ago
  It seems like a common misunderstanding because the reporting around this is so bad. > Musk and Twitter agreed to a so-called reverse termination fee of $1 billion when the two sides reached a deal last month. Still, the breakup fee isn’t an option payment that allows Musk to bail without consequence. > A reverse breakup fee paid from a buyer to a target applies when there is an outside reason a deal can’t close, such as regulatory intermediation or third-party financing concerns. A buyer can also walk if there’s fraud, assuming the discovery of incorrect information has a so-called “material adverse effect.” A market dip, like the current sell-off that has caused Twitter to lose more than $9 billion in market cap, wouldn’t count as a valid reason for Musk to cut loose — breakup fee or no breakup fee — according to a senior M&A lawyer familiar with the matter. 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...
  - jollybean 4y ago
    What did I misunderstand? Yes, I get that if there are 'material issues' maybe he can walk (even though he apparently waved a lot of that). He can't just walk away for 'no reason' and not pay the fine. The crashing price is probably not a legit reason.
    - avalys 4y ago
      No, it's worse than that. He can't just walk away and _pay_ the fine. He is obligated to close the deal and Twitter can force him to do so. If some external force stops the deal from happening - or if he can show that Twitter egregiously violated the agreement - he can get away with not buying Twitter, but he still has to pay them $1B.
      - jollybean 4y ago
        Hey Zeus. How could Musk possibly have done this, which must have been against the advice of his Bankers? "I'm sending men to mars, ergo, I know more about M&A than i-bankers? This is the kind of hubris that takes people down.
        tveita 4y ago
        It would be perfectly fine terms if he actually wanted to buy Twitter - at a silly price but hey, it's his billions of dollars. That's presumably what he told people and not "hey I'm just joking around, make sure to write the terms so the deal never actually completes"
        jollybean 4y ago
        Oh gosh, no, clearly they are bad terms. Deals don't happen for a lot reasons, o rational person would want to these terms understanding risk. And it's doubtful Musk was so dumb he'd enter into this contract 'just for fun' knowing the terms. I suggested he did want to buy it, got bad advice or didn't listen to his bankers, and then the market crashed, and now he's in a bind.
    - kgwgk 4y ago
      The point is that paying the ‘fine’ doesn’t give him the right to walk away for ‘no reason’. If he does he may end paying damages for much more than $1bn.
nathanvanfleet 4y ago
Why do you think it's mutual when Twitter is suing him for backing out?
- kgwgk 4y ago
  Why do you think he thinks it’s mutual?
  - paulgb 4y ago
    The phrasing could be read that way “No. The $1B clause does not involved the two contractual parties pulling out of the deal.” (Emphasis mine) I think OP may have intended to say “one of the two parties”
- eftychis 4y ago
  The deal can be stopped by a third party which is not the case at this point. See another grandchild comment that expanded on that.

? It's my understanding that if Musk walks, he's supposed to pay $1B and visa versa. So he's using the 'bot' issue to find an excuse for a deal he wants out of. [1] https://www.cbc.ca/news/business/elon-musk-twitter-1.6432315 https://www.cbc.ca/news/business/elon-musk-twitter-1.6432315

imustbeevil 4y ago
It seems like a common misunderstanding because the reporting around this is so bad. > Musk and Twitter agreed to a so-called reverse termination fee of $1 billion when the two sides reached a deal last month. Still, the breakup fee isn’t an option payment that allows Musk to bail without consequence. > A reverse breakup fee paid from a buyer to a target applies when there is an outside reason a deal can’t close, such as regulatory intermediation or third-party financing concerns. A buyer can also walk if there’s fraud, assuming the discovery of incorrect information has a so-called “material adverse effect.” A market dip, like the current sell-off that has caused Twitter to lose more than $9 billion in market cap, wouldn’t count as a valid reason for Musk to cut loose — breakup fee or no breakup fee — according to a senior M&A lawyer familiar with the matter. 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...
- jollybean 4y ago
  What did I misunderstand? Yes, I get that if there are 'material issues' maybe he can walk (even though he apparently waved a lot of that). He can't just walk away for 'no reason' and not pay the fine. The crashing price is probably not a legit reason.
  - avalys 4y ago
    No, it's worse than that. He can't just walk away and _pay_ the fine. He is obligated to close the deal and Twitter can force him to do so. If some external force stops the deal from happening - or if he can show that Twitter egregiously violated the agreement - he can get away with not buying Twitter, but he still has to pay them $1B.
    - jollybean 4y ago
      Hey Zeus. How could Musk possibly have done this, which must have been against the advice of his Bankers? "I'm sending men to mars, ergo, I know more about M&A than i-bankers? This is the kind of hubris that takes people down.
      - tveita 4y ago
        It would be perfectly fine terms if he actually wanted to buy Twitter - at a silly price but hey, it's his billions of dollars. That's presumably what he told people and not "hey I'm just joking around, make sure to write the terms so the deal never actually completes"
        jollybean 4y ago
        Oh gosh, no, clearly they are bad terms. Deals don't happen for a lot reasons, o rational person would want to these terms understanding risk. And it's doubtful Musk was so dumb he'd enter into this contract 'just for fun' knowing the terms. I suggested he did want to buy it, got bad advice or didn't listen to his bankers, and then the market crashed, and now he's in a bind.
  - kgwgk 4y ago
    The point is that paying the ‘fine’ doesn’t give him the right to walk away for ‘no reason’. If he does he may end paying damages for much more than $1bn.

nathanvanfleet 4y ago

Why do you think it's mutual when Twitter is suing him for backing out?

kgwgk 4y ago
Why do you think he thinks it’s mutual?
- paulgb 4y ago
  The phrasing could be read that way “No. The $1B clause does not involved the two contractual parties pulling out of the deal.” (Emphasis mine) I think OP may have intended to say “one of the two parties”
eftychis 4y ago
The deal can be stopped by a third party which is not the case at this point. See another grandchild comment that expanded on that.