It is becoming increasingly clear that Elon Musk no longer wants to buy Twitter Inc., at least not by bargaining. But Twitter will not go away without at least $ 1 billion – and potentially more – for the problem.
Mask bid for Twitter TWTR,
It has become one of the strangest M&A sagas seen in Silicon Valley. Here’s a quick summary: Musk bought some Twitter stock, agreed to stay on board, canceled the deal, and made a bid to buy the company, and it was taken personally and the bid was accepted. However, as stock prices plummeted in the wake of the overall market downturn, Musk is clearly suffering from buyer remorse and says the deal is “on hold”.
One problem with this move is that it does not exist.
Stephen Diamond, an associate professor at the University of Santa Clara University School of Law, said:
It is sometimes difficult to determine what is true when dealing with Tesla Inc.’s TSLA,
Chief executive, but one really obvious thing is true in this case: both parties have an agreement and it is legally enforceable. Musk is fishing because he could turn away from paying $ 44 billion for a company that would be fortunate to trade for half the valuation without a bid – and trading about 30% less with it – but is probably hoping to avoid the $ 1 billion breakup fee. Part of the contract.
“Getting cold feet is not a good enough basis to withdraw … so maybe at the moment if he really wanted to get out he would say so, and they would demand a breakup fee,” Diamond said, adding that Mask added most of what he had hired. The delay is to “find some leverage to renegotiate the agreement.”
That noise centered on the number of bot accounts on Twitter, which Musk believes exceeds the 5% amount that Twitter claims cautiously in filing with the Securities and Exchange Commission. Without any evidence, Musk claimed over the weekend that bots actually accounted for anywhere between 20% and 90% of Twitter users.
Twitter CEO Parag Agarwal showed Musk how to use real evidence and knowledge of the inner workings of social media. Kasturi, in response, sent Agarwal a pop emoji, which shows exactly what kind of speech he can make on the subject.
If all of this seems to you something that should have been hashed in the proper-diligence part of the deal-making process, you are not mistaken. However, before signing the deal, Musk relinquished the right to persevere on Twitter, as noted in Twitter’s SEC filing of the acquisition run-up details submitted Tuesday morning.
“Mr Musk further stated that his acquisition proposal was no longer subject to the termination of financing and business perseverance,” Twitter said in a summary of how the deal was broken.
Kasturi is also not learning about bots on Twitter for the first time. As Diamond noted, Musk spoke of resolving the bot issue as a reason to buy Twitter in a press release announcing the deal.
“Isn’t the whole point of buying it to make him better, so that he can improve it?” Hira asked.
Here it may be helpful to compile again and use a metaphor. What Musk has done is similar to a normal person who agrees to give up all inspection accessories to buy a home, publicly announcing when signing a home contract that “I’m going to fix this place from that dump now,” then during the closing period. Deciding that the home is a lot more dumps and personally claiming to be out of contract when attacking the seller.
So what about Twitter masks? I ask you what you would do as a seller homeowner in that situation: let the buyer go, sell the house to the buyer at a discounted rate, or hold the buyer’s foot on the fire and get every cent guarantee on the contract you signed?
For Twitter’s board and its executives, they must proceed in accordance with the agreement, and ignore the activities of their masks, which are crossing certain legal lines, until they can terminate an agreement. At the very least, Musk would have to pay 1 billion if he was found guilty of failing to close the deal.
In addition, since his recent actions on Twitter may be considered offensive to the company, which he agreed not to do at the time of signing the merger agreement, he may eventually take further legal action via Twitter.
“They don’t want to sue this guy, they want to sell the company,” Diamond said. “At the end of the day, what is the value of such a case? They will focus on moving forward with the agreement, and that’s it, and let Musk try to find some opportunities to reconsider the price. ”
And the board could try to do more than that. If Twitter puts an end to its bargaining and does not mask, the board could sue it for “certain performance,” which would force it to go through the acquisition specified in the agreement, if successful. While this is unlikely and will probably lead to a long and difficult legal battle, the threat could lead to a settlement of more than $ 1 billion, which seems to be the mask in this situation. Diamond noted, however, that the addition of certain performance streams, which are slightly rare, is an indication that Twitter was aware Mask could behave in this manner.
The Twitter board could take out of the pockets of the richest man in the world every percentage of what its shareholders owe, which it gave to the company, its investors and its employees last month. It is their faithful duty to do so, and Mask has given them every reason to stand firm against it.