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He bought it because he was sued for specific performance and was legally screwed in every available way. He literally waived due diligence and signed a contrac
by Eji1700 4y ago
He bought it because he was sued for specific performance and was legally screwed in every available way. He literally waived due diligence and signed a contract with a specific performance clause.
Companies couldn’t prove a MAC in the middle of the 08 housing crash, musk sure as hell wasn’t having screwed every legal argument he had available weeks in advance.
His options were buy now for 44 billion or buy maybe a month later for 44 billion plus whatever the court decided to tack on for hellishly bad faith dealing and arguments.
His legal team tried every truck available and even a lousy “well we said we’d buy it so they should drop the lawsuit “ play. The court saw right through and said “you get 4 weeks to buy and if not then the suit continues”
So they paid up because to claim you’re going to but then to not go through with it would have seen the most wrathfully phenomenal court proceeding in history.
Discovery was just an added bonus of embarrassment and very unlikely to be related at all. Every sound legal mind working for musk was probably screaming at him to shut up and eventually told him he was going to have to go through. The ONLY way this current situation could be worse is if he had continued to try and fight it after his last Hail Mary because that specific court exists almost solely to VERY quickly mitigate multi billion dollar deals and would absolutely make a very clear example out of anyone who thought they were too rich to touch.
Musk may be one of the most wealthy men in the world but Delaware deals with companies with MUCH higher net worth and resources constantly.
- johannes1234321 4y agoYes, he was forced to buy it ... after he initially signed a paper committing to buy it. He was only forced after trying to get out of what he had signed.
- pencilguin 4y agoIt would have cost him "only" a $B to weasel out, much less than expected losses. So it has value to him greater than those losses. Would be unsurprising if he used it for political leverage. I don't think he is allowed to run for the presidency, but he can probably seat his choice.
- johannes1234321 4y agoNo, it would have him cost 1bn if he wouldn't have completed the deal due to regulatory or similar reasons.
- Eji1700 4y agoCorrect. More people need to be aware of this. The 1 billion termination fee was never on the table
- Analemma_ 4y agoThis is a common misunderstanding. The $1B clause was for if the deal was blocked by regulators, it had nothing to do with Elon just deciding to back out of the deal, so just paying that to walk away was never an option. The commenters above saying that the court was about to order specific performance have it right.
- pencilguin 4y agoThat makes no sense. Why would anybody agree to a penalty for something they have no control over?
- detaro 4y ago(Reverse) break-up fees are a tool to ensure commitment of both sides to a deal. The main target in the Twitter deal was probably the financing, not the regulatory case, making it a bit less attractive to fail the financing for the deal somehow to get out of it (although there was some debate how realistic that option was anyways). And in the other direction, Twitter was on the hook for a billion for various things it could've done to hurt the deal, e.g. the board recommending shareholders vote against it, or for a competing offer.
- ilyt 4y agoIt's nice to see con-man slip so hard.
- jonnycomputer 4y agoTrump is a con-man. But Musk? Seeing how Musk's companies have actually put real cars on the road and rockets into space, I'm having a hard time buying that particular accusation.
- Eji1700 4y agoReally? Looked into the economics/fundamentals of the hyper loop? Or the crappy excuse for one they built in Vegas? How about that Mars mission?