5 ms·

"The merger agreement contained no references to false or spam accounts, and Musk didn't ask Twitter for any information to verify the number of spam accounts b

"The merger agreement contained no references to false or spam accounts, and Musk didn't ask Twitter for any information to verify the number of spam accounts before signing the merger deal, Twitter said. "To the contrary, Musk forwent all due diligence—giving Twitter twenty-four hours to accept his take-it-or-leave-it offer before he would present it directly to Twitter's stockholders," Twitter wrote." If that's true, it kind of makes the question moot.

ncallaway 4y ago
Not entirely moot. If Musk could demonstrate that the 5% number was actually a fraud (that is, not just wrong, but people were lying about it) and show that the true number is so different that it would cause a material adverse effect, then he’d have an argument to escape the contract even with the DD waiver. I don’t think he has a shot in hell at demonstrating fraud, given the various disclaimers around the quoted figure. And, if he’s saying the real number is 10%, he just doesn’t have close to a shot at reaching the material adverse effect bar (which lawyers have told me is a very high bar in Delaware courts). So, on the narrow path that he can navigate after signing away his soul and due diligence waivers, he’s still totally hosed. He really shouldn’t have signed that contract.
- NotTameAntelope 4y ago
  That’s kind of like saying he has a shot at getting out of the agreement if the sun collapses.
  - ncallaway 4y ago
    I’m just saying the issue isn’t legally moot, because there’s a legal path even after due diligence is waived. But, I think the facts of this case almost certainly foreclose that path.
  - ergocoder 4y ago
    Meanwhile other people argue that, even if twitter reports a wildly wrong number, twitter still isn't at fault. It seems like people like to exaggerate both ways.
    - NotTameAntelope 4y ago
      There’s no version of this where Twitter is at fault…
      - ergocoder 4y ago
        If twitter bot number is, say, 30%, you mean twitter will not be charged by SEC? Yeah, I disagree.
        NotTameAntelope 4y ago
        You can disagree all you want, Twitter made it clear its bot number could be wildly off. It never lied and the SEC understands that (unlike you). Buying into Elon Musk’s bullshit is a gigantic waste of time.
        ergocoder 4y ago
        > You can disagree all you want Everyone can disagree at any time. It's a discussion forum where diverse opinions are welcome. Are you gonna yell "water is wet" next? > Twitter made it clear its bot number could be wildly off An example: NVIDIA made it clear that they don't have full and accurate information of what their buyers use their chips for. Maybe some customers buy NVIDIA to hold and do chicken dance? who cares? Yet they were charged by SEC for not identifying that a large chunks of their buyers used it for crypto mining. Because this misled investors and shareholders on the company's outlook. The disclaimer doesn't protect the company from reporting wildly inaccurate numbers.
        NotTameAntelope 4y ago
        The disclaimer absolutely protects the company from reporting a wildly “inaccurate” subjective number, which is apparently a concept you simply do not understand.
- lokar 4y ago
  No, it's great that he signed the contract. It could ruin him, which would be fantastic.
- nolok 4y ago
  Even if he prove fraud (which he won't), there is countless evidence of him believing the number to be higher, and that specifically being one of the main reasons he wants to buy it so he can clean it up, so material adverse effect to the deal wouldn't hold
koheripbal 4y ago
No, because waiving due diligence does not mean the seller is immune to claims if they knowingly provided false data.
- rchaud 4y ago
  That will be almost impossible to prove. Especially as he provided an all-cash, take-it-or-leave-it offer based on publicly available financial data. He has access to lawyers and financial advisors to warn him against potential misstatemrnts on Twitter's part. If they signed off on it, he has no case. If they warned him against it, and he went ahead anyway, he also has no case. The judge will rightfully wonder how this isn't anything other than a attention-hungry blowhard trying to get out of scoring the most comical own goal in business history.
  - koheripbal 4y ago
    What happens in cases like this is that Musk will request the court for discovery of internal Twitter documents/emails/reports/etc to backup his claim that Twitter was aware that more bots existed in their BAU number than they reported. Twitter will object, but ultimately some degree of discovery will be allowed (with a more narrow scope), but it will pressure Twitter to settle for a lower purchase price because god only knows what kinds of incriminating shit lawyers will find in employee emails. Internal emails is always a big big random variable which can then spawn all sorts of unrelated lawsuits from discrimination, to regulatory fines, to executives' private life drama, etc... Even if Twitter is innocent - it is very easy for lawyers to intentionally misconstrue a vague email or threaten so with things found in discovery.
    - rchaud 4y ago
      Yes I also think a settlement is where this is headed. But the bill be pretty high.
    - gamblor956 4y ago
      Internal emails is always a big big random variable which can then spawn all sorts of unrelated lawsuits from discrimination, to regulatory fines, to executives' private life drama, etc... Given the NDAs that would apply to such discovery, were such information to exist and to become public, Musk would likely be imprisoned for contempt of court. Not simply fined. Imprisoned. And his lawyers would likely be suspended for a few months, if not disbarred. You don't mess with the courts, because they have the power to mess right back.

ncallaway 4y ago

Not entirely moot. If Musk could demonstrate that the 5% number was actually a fraud (that is, not just wrong, but people were lying about it) and show that the true number is so different that it would cause a material adverse effect, then he’d have an argument to escape the contract even with the DD waiver. I don’t think he has a shot in hell at demonstrating fraud, given the various disclaimers around the quoted figure. And, if he’s saying the real number is 10%, he just doesn’t have close to a shot at reaching the material adverse effect bar (which lawyers have told me is a very high bar in Delaware courts). So, on the narrow path that he can navigate after signing away his soul and due diligence waivers, he’s still totally hosed. He really shouldn’t have signed that contract.

NotTameAntelope 4y ago
That’s kind of like saying he has a shot at getting out of the agreement if the sun collapses.
- ncallaway 4y ago
  I’m just saying the issue isn’t legally moot, because there’s a legal path even after due diligence is waived. But, I think the facts of this case almost certainly foreclose that path.
- ergocoder 4y ago
  Meanwhile other people argue that, even if twitter reports a wildly wrong number, twitter still isn't at fault. It seems like people like to exaggerate both ways.
  - NotTameAntelope 4y ago
    There’s no version of this where Twitter is at fault…
    - ergocoder 4y ago
      If twitter bot number is, say, 30%, you mean twitter will not be charged by SEC? Yeah, I disagree.
      - NotTameAntelope 4y ago
        You can disagree all you want, Twitter made it clear its bot number could be wildly off. It never lied and the SEC understands that (unlike you). Buying into Elon Musk’s bullshit is a gigantic waste of time.
        ergocoder 4y ago
        > You can disagree all you want Everyone can disagree at any time. It's a discussion forum where diverse opinions are welcome. Are you gonna yell "water is wet" next? > Twitter made it clear its bot number could be wildly off An example: NVIDIA made it clear that they don't have full and accurate information of what their buyers use their chips for. Maybe some customers buy NVIDIA to hold and do chicken dance? who cares? Yet they were charged by SEC for not identifying that a large chunks of their buyers used it for crypto mining. Because this misled investors and shareholders on the company's outlook. The disclaimer doesn't protect the company from reporting wildly inaccurate numbers.
        NotTameAntelope 4y ago
        The disclaimer absolutely protects the company from reporting a wildly “inaccurate” subjective number, which is apparently a concept you simply do not understand.
lokar 4y ago
No, it's great that he signed the contract. It could ruin him, which would be fantastic.
nolok 4y ago
Even if he prove fraud (which he won't), there is countless evidence of him believing the number to be higher, and that specifically being one of the main reasons he wants to buy it so he can clean it up, so material adverse effect to the deal wouldn't hold

koheripbal 4y ago

No, because waiving due diligence does not mean the seller is immune to claims if they knowingly provided false data.

rchaud 4y ago
That will be almost impossible to prove. Especially as he provided an all-cash, take-it-or-leave-it offer based on publicly available financial data. He has access to lawyers and financial advisors to warn him against potential misstatemrnts on Twitter's part. If they signed off on it, he has no case. If they warned him against it, and he went ahead anyway, he also has no case. The judge will rightfully wonder how this isn't anything other than a attention-hungry blowhard trying to get out of scoring the most comical own goal in business history.
- koheripbal 4y ago
  What happens in cases like this is that Musk will request the court for discovery of internal Twitter documents/emails/reports/etc to backup his claim that Twitter was aware that more bots existed in their BAU number than they reported. Twitter will object, but ultimately some degree of discovery will be allowed (with a more narrow scope), but it will pressure Twitter to settle for a lower purchase price because god only knows what kinds of incriminating shit lawyers will find in employee emails. Internal emails is always a big big random variable which can then spawn all sorts of unrelated lawsuits from discrimination, to regulatory fines, to executives' private life drama, etc... Even if Twitter is innocent - it is very easy for lawyers to intentionally misconstrue a vague email or threaten so with things found in discovery.
  - rchaud 4y ago
    Yes I also think a settlement is where this is headed. But the bill be pretty high.
  - gamblor956 4y ago
    Internal emails is always a big big random variable which can then spawn all sorts of unrelated lawsuits from discrimination, to regulatory fines, to executives' private life drama, etc... Given the NDAs that would apply to such discovery, were such information to exist and to become public, Musk would likely be imprisoned for contempt of court. Not simply fined. Imprisoned. And his lawyers would likely be suspended for a few months, if not disbarred. You don't mess with the courts, because they have the power to mess right back.