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He could have backed out for only $1B--the dumbest and smartest $1B ever spent.

by gre 4y ago

detaro 4y ago
no, he couldn't. That was a fee if something out of his control stopped the deal (like the government saying no).
- dylan604 4y ago
  so even if he personally spent $1million on getting lobbyists to convince gov't to say no, that would still only have been $1.1b vs the ~$44 or whatever the price in the window was.
  - lazide 4y ago
    Why do you think he was getting involved in Ukraine, Taiwan, and apparently influencing ‘whistleblowers’? He was hoping he’d look like such a mess they’d step in and shitcan it. But no one took the bait.
    - rurban 4y ago
      It looks more like he wanted exclusive Tesla and/or SpaceX deals there. Russia has no proper cars, but China has. The Russian rocket industry might also look attractive, he won't get any Chinese contracts for sure.
      - lazide 4y ago
        The heavily embargoed, historic-enemy of the US Russia? The one who is actively threatening to nuke us because we’re sending millions of tons of weapons and ammunition to someone they’re invading while we sanction them to the gills? What are you smoking? There is no way they’d let him export Rocket engines to them, or cars. Likely for decades. I suspect the FBI visited him after his Putin talk and reminded him that they could make him register as a foreign agent, or go to jail for that. Not that anyone would say anything.
    - gre 4y ago
      Didn't he talk to Putin too? It's all making sense now.
      - lazide 4y ago
        Yup
    - drewbeck 4y ago
      You give him far too much credit. Musk has fundamental edgelord qualities and his support of powerful dictatorships is of a piece with that.
      - lazide 4y ago
        These are not incompatible ideas, by the way. Of course he’s going to do what he defaults to and knows best to try to get out of a bad deal? Can you really say edgelording so hard you appear to be a legitimate national security threat to get out of a $44bln deal you don’t want is something that doesn’t sound typically Elon Musk?
  - Tepix 4y ago
    1 million isn't 0.1 billion. It's 0.001 billion.
    - dylan604 4y ago
      it's all just rounding errors at that point though, but yes, you're correct. congratulations.
mlyle 4y ago
No-- the $1B was liquidated damages in the case the deal couldn't close for other reasons (regulatory, unable to finance). It didn't give Elon a blanket "out"-- the deal explicitly had a very strong "specific performance" term.
- phire 4y ago
  I was half expecting Musk to "fail to find financing" in a way that had plausible deniability, just so he could use the $1 exit clause. But that wouldn't have saved him from discovery in the court case, and I've also heard rumours the SEC were already looking into him for stock market manipulation over this Twitter thing.
  - klyrs 4y ago
    I was more than half expecting Musk's financiers to smell the bullshit and run screaming. He's already talking bankruptcy so I'm still wondering why they went forward.
    - hef19898 4y ago
      Well, depends on the backing they got from Musk, doesn't it? And honestly, who would have believed someone would burn 44 billion, including 13 billion in dept, so fast to a complete pile of ash? I do wonder so, with a lot of Tesla's success depending on Musks reputation and ability to raise money, what the fallout of this will be. Until the Twitter desaster, Musk was a sure bet for investors. Now? Well, his financing banks wanted 60 cent per dollar when selling the debt on to investors. And they were only offered 50 cent. That alone tells you a lot.
  - nocoiner 4y ago
    His financing was committed at the time he signed the merger agreement, and the banks that agreed to lend it were pretty tightly committed to the deal. They also have their own separate legal exposure and risk to their franchises if they refused to fund the debt at closing. If the financing failed to show up through no fault of the acquirer, then yes, the acquirer could terminate and pay a $1 billion break fee. But there have been recent Delaware cases that suggest an acquirer manufacturing grounds for its lenders to refuse to fund will not excuse the acquirer’s obligation to buy the company - regardless of whatever limited termination fee is written into the contract.

He could have backed out for only $1B--the dumbest and smartest $1B ever spent.

by gre 4y ago

He could have backed out for only $1B--the dumbest and smartest $1B ever spent.

detaro 4y ago

no, he couldn't. That was a fee if something out of his control stopped the deal (like the government saying no).

dylan604 4y ago
so even if he personally spent $1million on getting lobbyists to convince gov't to say no, that would still only have been $1.1b vs the ~$44 or whatever the price in the window was.
- lazide 4y ago
  Why do you think he was getting involved in Ukraine, Taiwan, and apparently influencing ‘whistleblowers’? He was hoping he’d look like such a mess they’d step in and shitcan it. But no one took the bait.
  - rurban 4y ago
    It looks more like he wanted exclusive Tesla and/or SpaceX deals there. Russia has no proper cars, but China has. The Russian rocket industry might also look attractive, he won't get any Chinese contracts for sure.
    - lazide 4y ago
      The heavily embargoed, historic-enemy of the US Russia? The one who is actively threatening to nuke us because we’re sending millions of tons of weapons and ammunition to someone they’re invading while we sanction them to the gills? What are you smoking? There is no way they’d let him export Rocket engines to them, or cars. Likely for decades. I suspect the FBI visited him after his Putin talk and reminded him that they could make him register as a foreign agent, or go to jail for that. Not that anyone would say anything.
  - gre 4y ago
    Didn't he talk to Putin too? It's all making sense now.
    - lazide 4y ago
      Yup
  - drewbeck 4y ago
    You give him far too much credit. Musk has fundamental edgelord qualities and his support of powerful dictatorships is of a piece with that.
    - lazide 4y ago
      These are not incompatible ideas, by the way. Of course he’s going to do what he defaults to and knows best to try to get out of a bad deal? Can you really say edgelording so hard you appear to be a legitimate national security threat to get out of a $44bln deal you don’t want is something that doesn’t sound typically Elon Musk?
- Tepix 4y ago
  1 million isn't 0.1 billion. It's 0.001 billion.
  - dylan604 4y ago
    it's all just rounding errors at that point though, but yes, you're correct. congratulations.

mlyle 4y ago

No-- the $1B was liquidated damages in the case the deal couldn't close for other reasons (regulatory, unable to finance). It didn't give Elon a blanket "out"-- the deal explicitly had a very strong "specific performance" term.

phire 4y ago
I was half expecting Musk to "fail to find financing" in a way that had plausible deniability, just so he could use the $1 exit clause. But that wouldn't have saved him from discovery in the court case, and I've also heard rumours the SEC were already looking into him for stock market manipulation over this Twitter thing.
- klyrs 4y ago
  I was more than half expecting Musk's financiers to smell the bullshit and run screaming. He's already talking bankruptcy so I'm still wondering why they went forward.
  - hef19898 4y ago
    Well, depends on the backing they got from Musk, doesn't it? And honestly, who would have believed someone would burn 44 billion, including 13 billion in dept, so fast to a complete pile of ash? I do wonder so, with a lot of Tesla's success depending on Musks reputation and ability to raise money, what the fallout of this will be. Until the Twitter desaster, Musk was a sure bet for investors. Now? Well, his financing banks wanted 60 cent per dollar when selling the debt on to investors. And they were only offered 50 cent. That alone tells you a lot.
- nocoiner 4y ago
  His financing was committed at the time he signed the merger agreement, and the banks that agreed to lend it were pretty tightly committed to the deal. They also have their own separate legal exposure and risk to their franchises if they refused to fund the debt at closing. If the financing failed to show up through no fault of the acquirer, then yes, the acquirer could terminate and pay a $1 billion break fee. But there have been recent Delaware cases that suggest an acquirer manufacturing grounds for its lenders to refuse to fund will not excuse the acquirer’s obligation to buy the company - regardless of whatever limited termination fee is written into the contract.