So in the end he was a troll.
Look, he was willing to believe he had said it wrong after the merger deal. Maybe Elon Musk took it seriously to change! Maybe I really wanted to have a social network managed as well! Maybe Musk was eager to give himself ulcers to treat content moderation issues! People have done a weirder shit for power, and I think we can all agree that Elon Musk is deeply interested in power. Why else would he be busy testing how Americans comply with their laws?
A quick summary: Musk is trying to make a runner in the acquisition of Twitter and Twitter does not have it. Twitter advocated in the crudest way possible: with the company that invented the poison pill. The company then filed a lawsuit against Musk in an attempt to force the merger.
When the Twitter complaint fell through, my impression, on first reading, was that someone had a lot of fun assembling it, mostly because the screenshot of Musk’s poop tweet was included:
I just guess whoever formatted this document laughed dark all the time.
I love a good lawsuit. Can Twitter win? “He signed a contract, he says what he says,” says Tom Redburn, the chairman of Lowenstein Sandler’s securities litigation, after he finished laughing at my exasperation. Because Musk waived due diligence, this is what happens when you investigate the company you are acquiring before accepting an acquisition, its ability to move away from the deal is limited. “This is a difficult position for a buyer,” Redburn says.
In fact, the Delaware chancellery court, which is widely used by businesses, tends to be quite unfriendly with buyer remorse, Redburn says. There is a high profile case in which a buyer successfully came out of a transaction, and it was due to fraud. In 2018, the medical group Fresenius, known for its dialysis service in the United States, did not successfully buy drug maker Akorn because Akorn hid a lot of business problems. “Fresenius was able to prove that Akorn was inventing his data,” Redburn says. That would put a bit of a damper on a fusion!
This is a little different from a half-asserted claim that Twitter accounting for non-authentic activity is incorrect. Musk’s transparent bad faith justification for getting out of the deal with Twitter is that there are too many spam bots and the company won’t give you the data you need to determine exactly how many there are. Pathetic. Even if that’s true, and I have no reason to believe it is, Musk’s team has yet to prove that it matters in any way material to the business.
Twitter must remain committed to the part of being bought by Musk to get any kind of consolation prize
“If you take out the crossings, that’s not an atypical type of demand,” Redburn says. “We’ve seen a good amount of that over the last few years.” During the pandemic, for example, private equity firm Kohlberg & Company tried to get out of a $ 550 million deal to buy a cake decorating company called DecoPac. Presiding Judge Kathaleen McCormick ruled against Kohlberg, who became the proud (?) Owner of DecoPac in May 2021. McCormick is now the chancellor, who is what Delaware calls the most elegant court judge in the world. stationery.
Now, I don’t know that the Twitter case will necessarily go to trial. It seems possible that Twitter is willing to settle, perhaps demanding a payment in excess of the $ 1 billion specified in the contract with Musk if the transaction was not carried out. I guess Twitter could renegotiate the transaction at a lower cost, but if I were Twitter’s board of directors, I certainly wouldn’t because then you’re still in a deal with Elon Musk, and that shit is for idiots. Although I guess there is empirical evidence at this point that the composition of the board is exclusively cool.
But the mechanism of these results is the demand presented by Twitter: it must remain committed to the part of being bought by Musk to obtain any kind of consolation prize. So the next fun part will be the discovery. All it takes is an email or text message where Musk admits he doesn’t take the deal seriously to remove his entire position. And because of the lack of control over Musk’s impulses, it seems possible to me that someone is inciting him to say so.
The more I think about it, the more I get angry at the small lectures on fiduciary duty
So what are Musk’s chances? Famous Hindenburg Research short sellers (you may remember them as those alleging fraud to electric car companies Nikola and Lordstown Motors, which resulted in SEC investigations) have spent a lot of time on Twitter, making short of effectively to Musk. Also, Matt Levine of Bloomberg, a real lawyer, has reviewed the details of the lawsuit and I will not do a better job. What interests me, though, is a very annoying conversation I’ve had with people over the past few weeks – what stupidity did it take the Twitter board to take Musk seriously?
Whenever I have asked this question, I have received a kind of nonsense about fiduciary duty. Basically, the idea is that maximizing shareholder value means that Musk’s obviously unserious offer has to be taken seriously because, hey, it would be a lot of money for shareholders if it were real.
But that is exactly what I mean !!!!!! Elon Musk says he will do a lot of things and will do about a quarter of it, maybe less, and usually not on time. If someone with a history of poor impulse control, violating agreements and launch licenses, ignoring regulators (remember “I don’t respect the SEC”?) Is courting you for a purchase, and they make a beacon that will leave your company private , your standard common sense fiduciary duty is to tell him to get lost. Wait and see if he will make the bidding offer he threatened or if he will lose interest because something new and bright appears. I mean, this guy fathered 10 kids he knew with how many women? This does not exactly suggest a skill for commitment or, frankly, a great capacity for attention.
Man, the more I think about it, the more I get angry at the little lectures on fiduciary duty. Does anyone who has followed Musk know of his attempt to start a media company, without thinking about how to monetize it and then shut it down immediately because, I guess, he bored it? I mean the short-lived Thud, which was like MSCHF but without a business model. Musk thought about it because he didn’t buy The Onion when it was on sale; Thud folded before he ever had a chance to do anything exciting.
So what should Twitter advice have done?
Well, obviously they should consult with their financial and legal advisors. The board probably should have listened to Musk. But one thing the board can do is say “no ❤️” and get on with their business!
Of course, maximizing value is very important to shareholders, but let’s look at how the madness of Twitter’s board works:
- Layoffs of key personnel
- Musk’s rude tweets about Twitter employees, causing harassment of his flying monkeys
- Stop long-term product development
- Distract employees and make the company a more unpleasant job
- A car dispute
This is not what I would say to maximize shareholder value; it is sinking the business to the ground, sinking shareholders in the process. Do you know what would probably have maximized shareholder value and also been very satisfying? Telling Elon Musk to fuck.