4 ms·

Because it’s not a break up fee. He can’t just say “I’m out, here’s a billion dollars for your trouble.” Twitter can (and did) sue for specific performance (fo

Because it’s not a break up fee. He can’t just say “I’m out, here’s a billion dollars for your trouble.” Twitter can (and did) sue for specific performance (forcing Musk to close the sale). If the court decides to award monetary damages instead of specific performance that’s capped to $1B but it’s not a simple break up fee. Also most of the purchase will be Musks money too. Financially he’s much better off paying $1B than buying Twitter at the contract price today.

Volundr 4y ago
Actually damages would not be capped at $1B. The $1B penalty is failing to close through no fault of his own, ex he's unable to secure financing. That ship has long since sailed.
- pc86 4y ago
  There is another reply to another of your comments explaining why this is not true, and paragraph (1) of that clause covers Musk just choosing to walk away.
  - Volundr 4y ago
    Except it doesn't. The full clause you are discussing: "Specifically, this termination fee is payable by Parent to Twitter if the Merger Agreement is terminated by Twitter because (1) the conditions to Parent’s and Acquisition Sub’s obligations to consummate the Merger are satisfied and the Parent fails to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement;" The comment conviently cut the first part of the sentence where the clause is effective if the acquisition is terminated by Twitter.
pc86 4y ago
There's no law capping monetary damages at $1B and you can't enter into a contract limiting the government's ability to do much of anything unless the other party is the government. So even if the contract caps monetary damages (it doesn't), no court would follow that.
- kgermino 4y ago
  Not sure why you'd need a specific law. I'm not an expert (or lawyer) but damage caps are a pretty common feature of big contracts and AFAIK they're perfectly enforceable. The legal commentary I've seen on this deal states that monetary damages are capped at $1B (and actual damages would obviously be much higher) so the two outcomes are basically 'Musk forced to buy Twitter' and 'Musk pays Twitter $1B' without much in between. Assuming the lawyers who took the time to read the contract know what they're talking about it would be a pretty big surprise for the Delaware Chancery to throw out the contract and award higher monetary damages.

Volundr 4y ago

Actually damages would not be capped at $1B. The $1B penalty is failing to close through no fault of his own, ex he's unable to secure financing. That ship has long since sailed.

pc86 4y ago
There is another reply to another of your comments explaining why this is not true, and paragraph (1) of that clause covers Musk just choosing to walk away.
- Volundr 4y ago
  Except it doesn't. The full clause you are discussing: "Specifically, this termination fee is payable by Parent to Twitter if the Merger Agreement is terminated by Twitter because (1) the conditions to Parent’s and Acquisition Sub’s obligations to consummate the Merger are satisfied and the Parent fails to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement;" The comment conviently cut the first part of the sentence where the clause is effective if the acquisition is terminated by Twitter.

pc86 4y ago

There's no law capping monetary damages at $1B and you can't enter into a contract limiting the government's ability to do much of anything unless the other party is the government. So even if the contract caps monetary damages (it doesn't), no court would follow that.

kgermino 4y ago
Not sure why you'd need a specific law. I'm not an expert (or lawyer) but damage caps are a pretty common feature of big contracts and AFAIK they're perfectly enforceable. The legal commentary I've seen on this deal states that monetary damages are capped at $1B (and actual damages would obviously be much higher) so the two outcomes are basically 'Musk forced to buy Twitter' and 'Musk pays Twitter $1B' without much in between. Assuming the lawyers who took the time to read the contract know what they're talking about it would be a pretty big surprise for the Delaware Chancery to throw out the contract and award higher monetary damages.