Comment by Traster | Hacker News Reader

Comment by Traster | Hacker News Reader

Well this certainly makes what Parag did make sense. The market conditions have essentially dictated that Musk is now massively overpaying for twitter, and he's doing it from a weak position with the value of Tesla dropping. It would be insane for him to close at this price, and the other people who bought in to finance it will also be very hard to keep on board. So Musk needs to walk away at this price. The question is whether he can either find an out that doesn't involve paying the break up fee, or bully Twitter's board to accept a lower price. Given how Parag is behaving I think that's unlikely.

It's important to remember though, if Musk walks away and then comes back with another offer it's going to be extremely hard to convince of a new deal, since Musk no longer has any credibility.

The other thing to consider is that no one else wanted to buy Twitter for $45Bn. But let's say Musk walks away and Twitter drops back to where it should be at around $25 per share. Now you could easily see someone coming in and picking it up for $35-40 per share.

I think that's why he's hunting for the less than 5 % spam accounts. If that isn't accurate I bet you it allows them out of the breakup fee.

Also probably difficult for Musk to go in at a lower price if the deal falls apart. Best and most likely only route forward for twitter ownership by Musk is probably board agreeing to a lower price but prices are sticky in peoples mind so might be tough times ahead.

>If that isn't accurate I bet you it allows them out of the breakup fee.

Not really. There's nothing in the deal contingent on this and Twitter has no fiscal or regulatory responsibility to report which accounts are fully human or not human. Having APIs and allowing bots shows that Twitter is open about having bot accounts.

This is correct. [This article][1] ([archive link][2]) goes through some of the contract law stuff, and they speak to this:

* The merger agreement contains a provision that allows Musk to walk away if Twitter’s securities filings are wrong — and this 5% number is in its securities filings — but only if the inaccuracy would have a "Material Adverse Effect" (MAE) on the company.

An MAE is apparently a high standard and courts [almost never find an MAE][2]

[1]: https://www.bloomberg.com/opinion/articles/2022-05-13/elon-m...

[2]: https://archive.ph/NFWVp

[3]: https://www.jonesday.com/en/insights/2018/10/delaware-chance...

The article does also go on to say however that Musk will probably do whatever he wants without concern for the law, and without substantive repercussions. He can walk away from the deal just because he wants to, because he will be more aggressive in court than Twitter, and it wouldn't be advantageous of Twitter to go after him.

True, but Levine talks about that wrgt going against the SEC. Twitter is a billion dollar corporation with a signed IOU from Musk and a duty to go after it.

It's not the same as what Musk has pulled in the past, but will still be interesting to see how it plays out regardless.

Yeah this is the main question in my head Im curious to see how it plays out. Assuming Musk comes back at a lower price that may be shrewd negotiating, but once he buys they’re out right? Taking a 20% haircut on your investment seems like something a lot of people may not swallow, especially if they think the market will turn around and trust Parag. Heck, there stock was like at 65 a year ago.

To further expand on Parag: he might’ve fired his political enemies who expressed support for Elon.

Or at least that’s my theory. What was yours?

My theory is that he is actually just acting like the deal won't close. The plans they put in place after the activist shareholder have largely failed and now the market conditions are way worse. So he's going to bring in some new people and make a big pivot to some other revenue streams. I don't know what that is yet, but I think that'll emerge over the next 6-12 months.

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