To a non-lawyer I suppose this looked like a good pretext, but it was not. It was not for at least three reasons:
Musk had not a shred — not even the tiniest bit — of evidence that Twitter’s estimates are wrong, and it seems very likely that they are right.[1]
Even if Twitter’s estimates are wrong, Musk could not get out of the merger agreement unless the error was likely to have a “material adverse effect” on Twitter’s business, and it absolutely would not.
Musk has been talking about Twitter’s bot problem forever, and in fact he originally said that he wanted to buy Twitter in order to fix the bot problem, so no one could possibly believe him when he said that he wanted to walk away from the deal because he just discovered that Twitter has a bot problem.
Yeah. His point about “Elon Musk just gets to ask for anything then claim a covenant violation” is good and seems like a fuck up by twitter’s lawyers. Like these documents have boilerplate that assumes you have normal human beings acting in somewhat good faith but it’s like dealing with Trump, you have to asshole proof everything.
So people think Musk will actually want to wriggle out but won’t be able to? That seems very unlikely to me, he’s super high on his own supply and has unlimited resources.
i might be off on the timing, but i feel like one of those polls was before the official offer, and people were voting based on the fact that it was elon bluster and twitter wouldn’t want to be bought by musk… and im pretty sure i voted that it wouldn’t happen because i didnt think it was a real scenario.
now i think twitter seem to be full steam ahead because of the inflated price. and elon is looking for ways to weasel out. he very well may be able to for sure, like you said he’s probably very willing to go to court and use those unlimited resources to try and save face.
but i’m more likely now i think to believe the sale goes through than i was in april.
I don’t know the specifics or mechanics of how this works but I would think Twitter’s board kind of has to try to hold him to the deal now because they’re going to get sued by their shareholders if they don’t. Lowering the price also seems dumb because what is the point of making an agreement with a guy currently breaching your agreement, you’re just letting this asshole permanently freeroll you.
Going to have to quibble with the notion that M&A agreements are based on a presumption of normal human beings acting in good faith. Also skeptical that STB just whipped out their form agreement and forgot to stress test the provisions about deal certainty.
Paxton is apparently simping elon now, gonna get in on helping Musk by announcing a random Texas state “investigation” into twitter bot numbers. because that’s the big concern for texas right now, how many bots twitter has.
I voted in the poll that the deal would happen, but thinking about it further, I suspect the resolution is that Elon pays some amount of money floored at $1B and walks away. The BOD is not getting sued for pocketing an easy $2B dollars rather than embarking on a huge litigation campaign to try to get specific performance of a $50B merger. Alternative is a deal at a lower price, but that seems a little toxic.
Compared to what? There’s no way of drafting the MA that keeps Musk from making up a pretext to back out of the deal. The argument that Skadden came up with seems like pretty weak tea.