The ongoing Elon Twitter saga: "insert demographic" melts down

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unwashed potato! said:
You're missing a very important set of events inbetween all this. Musk did (try to) pull out. It was rejected by twitter, and they took him to court to force it, something they could do, due to Elon's own terms he set when he made his initial offer.

The court case was about to conclude and it is widely accepted that it was going to conclude that Elon had to buy twitter and couldn't walk away.
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Did Musk offer up the $1bn? As it all seemed like he was trying to find cause (bots and spam accounts etc) to walk-away without paying the termination fee.
Plus the termination fee was for both parties and not just Musk, so it's understandable Twitter wanted to force his hand.

Saying that, without seeing the contract we're all just taking stabs in the dark...

Edit - Bloomberg articles (Archived for access) with a little insight to the termination fee - https://web.archive.org/web/2022051...deal-includes-1-billion-termination-agreement
 
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visibleman said:
Did Musk offer up the $1bn? As it all seemed like he was trying to find cause (bots and spam accounts etc) to walk-away without paying the termination fee.
Plus the termination fee was for both parties and not just Musk, so it's understandable Twitter wanted to force his hand.

Saying that, without seeing the contract we're all just taking stabs in the dark...
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The analysis I saw at the time suggested that the termination clause was about inability to proceed, not a voluntary withdrawal, and a voluntary withdrawal would be subject to litigation with a likely pay-out for Musk of order $16bn. Who knows, as you say.

But if there was a $1bn exit clause he was too egotistical to take then that would be genuinely hilarious. Imagine throwing away the best part of $44bn because you were too proud to pay $1bn to get out of it, and too blind to your own flaws to make a success of the thing.
 
Mr Jack said:
But if there was a $1bn exit clause he was too egotistical to take then that would be genuinely hilarious. Imagine throwing away the best part of $44bn because you were too proud to pay $1bn to get out of it, and too blind to your own flaws to make a success of the thing.
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It would be nuts indeed, I just don't believe it to be true based on what we heard and saw, but also, it just doesn't make sense given that the price of his Tesla stock would have probably shot up had he announced he was walking away and paying the billion to do so, and then Elon prob could have made more from that alone. Didn't he make 16 billion in a day during the pandemic?

visibleman said:
Saying that, without seeing the contract we're all just taking stabs in the dark.
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Indeed. Though obviously that stabbing has some direction given the events that transpired.
 
Raymond Lin said:
If he couldn't then why a £1 billion option? If it weren't an option? why the billion? The contract stated that he had to go through or the get our clause was £1 billion wasn't it? Else whats the point of a get out clause?

You still haven't explain why he can't refuse himself?
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You're getting some muddled replies I think so I'll try: the point of that clause is it applies if regulators step in or financing for the deal falls through, these deals will involve significant expenditure on the part of the target company too so a provision is put in place to compensate them too... it's not for him to get cold feet, he's committed to the deal but a third party might prevent it, he still has to bear some of the cost of that but he's not going to get sued over it.

But on the flip side, there will be a material adverse effect clause for him to cover fraud etc.. this is why he tried to push the spam/bots angle as this could allow him to walk away, it didn't look like that was going to go his way so he scrapped that and went ahead with the deal.

Roar87 said:
So you're seeing an exchange between Elon Musk and people at Twitter and assuming he is wrong and they are right, because...?
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I wouldn't necessarily, the refectory/catering lady for example probably is being a bit of a dumb bint, she seems to be citing material costs (and likely breaking it down by meals prepared) whereas he's looking at total costs and meals served... so including kitchen staff costs etc.. for that service + the fact that with people working from home they're likely wasting a lot. Thus they've ended up with rather different figures.

Those free meals can be a huge expense, some tech companies instead give a generous budget for staff to order in food from any number of delivery services etc..

The engineering issues though I suspect are the opposite the female engineer posted I suspect is right and Elon doesn't have a clue/hasn't yet grasped the framework she mentioned, ditto to the guy and the Android issues, though there perhaps is a bit of "well ackchually" going on in that case, Elon might have a bit of a point in the general case re: what have you done to fix this?/Why is it so slow? Even if he's completely fluffed the details.
 
The $1 billion exit clause wouldn't have stopped them suing him for the rest of the agreed fee, and the only reason he could legally pull out was if he had a reason to do so due to 'material adverse effects'. Seeing as this is due to things like fraud and the like, not 'bots' as Elon so lovingly liked to talk about, he had no legal reason to pull out. Had he not skipped due diligence or even consulted with a lawyer, as any sensible or even vaguely legally competent person would do, they would have told him this. As such, when he agreed to buy Twitter at the vastly over-valued price just for the memes, he put himself in a position where he was legally obligated to do so and had zero ways of getting out of it. He didn't even put anything to do with bots in the contract, yet this was all he harped on about for months afterwards.

In a nutshell - he ****** himself over just to appear in the top of the news headlines for a while as the world wasn't paying him enough attention.
 
Penfold101 said:
The $1 billion exit clause wouldn't have stopped them suing him for the rest of the agreed fee, and the only reason he could legally pull out was if he had a reason to do so due to 'material adverse effects'. Seeing as this is due to things like fraud and the like, not 'bots' as Elon so lovingly liked to talk about, he had no legal reason to pull out. Had he not skipped due diligence or even consulted with a lawyer, as any sensible or even vaguely legally competent person would do, they would have told him this. As such, when he agreed to buy Twitter at the vastly over-valued price just for the memes, he put himself in a position where he was legally obligated to do so and had zero ways of getting out of it. He didn't even put anything to do with bots in the contract, yet this was all he harped on about for months afterwards.

In a nutshell - he ****** himself over just to appear in the top of the news headlines for a while as the world wasn't paying him enough attention.
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That makes sense thanks...and it is even funnier than his ego was too big to pull out.
 
Penfold101 said:
The $1 billion exit clause wouldn't have stopped them suing him for the rest of the agreed fee
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That's muddled, AFAIK there isn't some higher "agreed fee" he'd pay the rest of, there's a price to literally buy the company but if he walked away without good reason he'd not be able to pay the be sued and a court would award damages... that wouldn't necessarily mean paying the full price of the deal anyway but would perhaps be more than the 1 billion.
 
Raymond Lin said:
That makes sense thanks...and it is even funnier than his ego was too big to pull out.
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Elon isn't known for pulling out anyway...

There were other ideas going around which I wrote about months ago - it may have been a way for him to legitimately liquidate some of his Tesla stock so he had some cash lying around but without tanking the price too much, before pulling out of the deal and keeping the money. Almost all of his 'wealth' is tied up in the stock price of that company, and when your baby mommas need those monthly cheques...
 
dowie said:
That's muddled, AFAIK there isn't some higher "agreed fee" he'd pay the rest of, there's a price to literally buy the company but if he walked away without good reason he'd not be able to pay the be sued and a court would award damages... that wouldn't necessarily mean paying the full price of the deal anyway but would perhaps be more than the 1 billion.
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He legally agreed to buy it at one price, and Twitter would have been within their rights to sue him for the full amount if they chose to, over and above any exit fee, up to the price he offered. Seeing as any amount (say, $10 billion) would leave him worse off AND without anything to show for it, he backed himself into a corner where he had no choice.

This is why he caved just before the court date as that would just end up costing him even more.
 
Penfold101 said:
He legally agreed to buy it at one price, and Twitter would have been within their rights to sue him for the full amount if they chose to
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That seems doubtful... they may have been able to sue to complete the deal but if not and he were to walk away I can't see how they'd justify the full asking price as damages.

Surely: 1 billion < settlement < 44 billion
 
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JRS said:
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Go Woke go Broke.
oh wait
Never go Full Elon

anyway isn't Elons problem some company who controls the advertising on 500+ company's behalf is boycotting twitter, some mega woke company it seems
EDIT company is Interpublic Group so seems they who control the advertising budget of the worlds companies controls speech and agenda
 
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dowie said:
That seems doubtful... they may have been able to sue to complete the deal but if not and he were to walk away I can't see how they'd justify the full asking price as damages.

Surely: 1 billion < settlement < 44 billion
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Yes, they would probably come to a settlement somewhere in the middle or force him to go through with it.

One way Twitter make a fortune but then have to carry on running the company, the other way is that make a bigger fortune and can offload the whole dumpster fire onto some bloke who has no clue what he's doing.

For Musk, he either has to pay the full amount and end up with a dumpster fire he has no idea how to run, or lose billions (1>?<44) and have nothing to show for it except having been shown to be an idiot.
 
dowie said:
That seems doubtful... they may have been able to sue to complete the deal but if not and he were to walk away I can't see how they'd justify the full asking price as damages.

Surely: 1 billion < settlement < 44 billion
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This is my understanding of the (averted) lawsuit. Twitter sued in Chancery Court in Delaware to force Musk to complete the deal. There were a few scenarios.

1) Twitter wins, Musk is compelled to buy Twitter. He does so, and looks like a gimboid for having ended up in court over it.
2) Twitter wins, Musk is compelled to buy Twitter. He refuses, is on the hook for the $1bn, and looks like a complete gimboid.
3) Musk wins, doesn't have to buy Twitter. Pays the $1bn to walk away, and looks like a bit of a gimboid.
4) Musk wins, doesn't have to buy Twitter. Renegotiates a deal to buy it for rather less than $44bn, garners huge sympathy when this is inevitably rejected and makes the Twitter execs look like gimboids.

Obviously he ended up coming to the realisation that 4) was vanishingly unlikely, so he headed it all off at the pass by completing the deal.
 
JRS said:
This is my understanding of the (averted) lawsuit. Twitter sued in Chancery Court in Delaware to force Musk to complete the deal. There were a few scenarios.

1) Twitter wins, Musk is compelled to buy Twitter. He does so, and looks like a gimboid for having ended up in court over it.
2) Twitter wins, Musk is compelled to buy Twitter. He refuses, is on the hook for the $1bn, and looks like a complete gimboid.
3) Musk wins, doesn't have to buy Twitter. Pays the $1bn to walk away, and looks like a bit of a gimboid.
4) Musk wins, doesn't have to buy Twitter. Renegotiates a deal to buy it for rather less than $44bn, garners huge sympathy when this is inevitably rejected and makes the Twitter execs look like gimboids.
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No, I don't think so.

In scenario 2 I believe he could be liable for more than 1 billion, 1 billion is the fee he pays if a third party causes the deal to fail but that isn't the case here.

Scenarios 3 and 4 are basically the same as far as the detail we're talking about is concerned, if he won he'd not have to pay 1 billion... whether he then submits a new bid at another price is another matter.

The court case was, AFAIK, him alleging there had been some material adverse effect on the deal re: fraud concerning bots/spam, if he could prove that then he'd not have to pay anything.
 
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dowie said:
The court case was, AFAIK, him alleging there had been some material adverse effect on the deal re: fraud concerning bots/spam, if he could prove that then he'd not have to pay anything.
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You mean all the things he would’ve discovered if he’d done some due diligence instead of just making an official offer?

Colour me surprised that he caved in before it started.
 
Penfold101 said:
You mean all the things he would’ve discovered if he’d done some due diligence instead of just making an official offer?
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Not necessarily, that would be assuming the bot/spam issue was in fact there/could be proven, I mean he was essentially doing it backwards; doing the DD afterwards when he launched the court case and since he's dropped the court case then I guess we can draw our own conclusions from that... he wouldn't have discovered this stuff if he'd done his DD because there perhaps wasn't there! Or at least it wasn't as big an issue as he initially seemed to be making out when launching the case.

In fact had he done his due diligence then it would have delayed the deal a bit, could have seen tech stocks start to drop (which is likely the real reason he got cold feet) and he'd have been able to bid for a lower price anyway... ironically it would be Parag currently conducting layoffs (albeit not 50%) and Elon could start with lower level of debt, a company that has already had a round of layoffs and much less risk. I guess the ADHD kicked in he got a bit too impulsive and wanted it done now!
 
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Raymond Lin said:
But not a social media platform, and not how the tech of a social media platform works.

He isn't smart enough to stop himself not do both of these.

It would be much smarter decision to pay the billion dollar settlement than to do what he is doing. He sold almost $5 billion Tesla Shares last week!

His ego is too big that clouds his judgment, smart? I don't know, he isn't stupid...but clearly lacking some IQ points in certain areas.

The smart move would be go "ah, you got me, joke went too far. Here is your billion dollars". Instead he went "you are not getting a billion for free. How about I pay you $44 billion, overpriced, and then come and burn the house down. My ego needs this win."
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I don't think the billion dollars get out clause was there as an option in the end. He had no choice but to go through with the purchase.
 
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