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Comment by rurp | Hacker News Reader

I literally can't imagine ever wanting to do business with Elon Musk. Matt Levine has written a lot about this deal and it sounds extremely clearcut that Elon is contractually committed. There is no "buyers remorse" or "lol, jk" clause in the deal.

That said, I have a feeling he will weasel out with nothing more than a slap on the wirst, if even that.

Twitter's board isn't exactly known for its competence and backbone, so I suspect it will back down if Elon yells and lies enough about whatever pretext he decides to use to back out of the deal.

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The board may not have a backbone, but their legal team has blood in the water for a multi-billion dollar settlement. I don't see how this doesn't end with years of expensive litigation (barring a new agreement).

Yeah, the updated link content says they plan to sue to enforce the original buyout terms:

>>"Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," the company said in a statement.

>>"We believe this agreement is in the best interest of all shareholders," it added. "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."

There is no way Twitter can possibly back down unless they get a huge settlement from Musk or unless the share price goes way up.

If they let him walk away, they would get sued by their own shareholders for losing them a ton of money.

But Twitter's board has to fight, no? Elon is essentially accusing them providing fraudulent statements. If they admit as-is, it can open a massive door for other lawsuits.

No, they don't have to do anything except say, "We had a contract and you agreed to waive due diligence. Pay up."

EDIT: pay up in this context probably means $1 billion, though given that he is the world's richest man, it could conceivably include specific performance of the contract (meaning going through with the deal).

Elon has just been thrashing with the reality he is on the hook for $1B due to this stupid idea.

The problem is that Elon, for so long, has avoided the consequences of his actions that the thought of being held accountable to perform or pay the termination fee feels like oppression to him.

Had he acted with integrity and honesty, he wouldn’t be in this situation of his own making, but those traits aren’t what made him wealthy.

The $1B breakup fee isn't an option that Elon can exercise. See e.g. https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...

I would hesitate caution before assuming that “waiving due diligence” is a magic get out of jail free card. It’s rarely that simple in a contractual dispute.

More than $1bn. It’s damages (i.e. how much he would have overpaid) - so more like $15bn. The $1bn is for if outside forces (e.g. antitrust laws) prevented the deal from closing.

Elon based his argument on fraudulent report provided by Twitter: https://twitter.com/elonmusk/status/1533839270976204801 thus the "waive due diligence" doesn't apply here.

Nah,

Long way for that, you'd have to (at least):

* Prove the report contains false info

* Prove it happened on purpose AND with an intent to commit fraud

* Prove it affects the transaction in a substantial way

* Prove this is enough to stop the transaction from happening, and get away with zero consequences

... and it won't be hard for Twitter's lawyers to turn any of these on their favor.

Agreed. That's why I mentioned in my root comment that Twitter board needs to fight this. Elon's line of reasoning is bad for Twitter as a company.

Nah, Elon is more bloviating than making a serious accusation. He waived his due diligence and is not using the same terms as Twitter, possibly because he's dumb but I think more likely because he's trying to deliberately mislead people. Twitter's 5% claim (from public financial filings!) is about monetizable users, not "accounts that look like bots to Elon" or whatever other standard he wants to use. He's acting in bad faith and Twitter knows it.

Agreed on all counts. Matt Levine is a genius and one of the best writers ever, and Musk is a charlatan and a bully.

> I literally can't imagine ever wanting to do business with Elon Musk.

Never mind Twitter. Buying a car from that guy is really absurd and dangerous.

This whole episode finally convinced me to sell my Tesla stock. I don't want anything to do with this clown.

> Never mind Twitter. Buying a car from that guy is really absurd and dangerous.

Very true. I was rooting hard for Tesla to succeed a number of years ago, but these days there's no chance I would even consider buying one of their cars. A few people close to me own Teslas and I worry quite a bit about their safety. I really hope that Musk's absurd behavior lately opens some more eyes to just how reckless and irresponsible the company is.

Given that the SEC likely has a bone to pick with Elon for his other stunts, I wonder if they'd step in under their authority to make sure he doesn't get away with just a slap on the wrist. Not so much forcing him to go through with the sale, but use their soft power to ensure he pays the breakup fee.

At this point the deal is as much politics (not left/right, but posturing between powerful institutions and individuals) as business, so anything could happen.

The SEC has little to do with the legal merger agreement. That will be executed (or not) under Delaware corporate law.

I certainly expect him to pay the 1 billion dollars required for backing out, but of course he will try to avoid that.

The real reason is that he can't afford to buy Twitter at the negotiated price, which is entirely on Musk.

Too bad Elon didn't wait a while longer, the market is dipping left and right.

There is a misapprehension about the breakup fee: It isn't at Musk's discretion that he can pay the fee and walk away. The breakup fee would be paid if the deal can't proceed for reasons outside Musk's control. That does not include wanting to argue due diligence matters, having waived dd.

If Twitter was lying on their sec reports then yes the deal can certainly be terminated.

citation needed

the merger agreement is clear. the only thing that can free elon from completing the deal is lack of regulator approval and no regulators are even looking at the deal

Nope. You’re just making that up.

Elon explicitly gave up his right to due diligence.

Due diligence beyond the fillings that Twitter had already made to the SEC. (Working under the supposition that those have been fraudulent for years)

No, this would normally be covered by a due diligence provision but Musk expressly chose not to include one in the agreement as an incentive to Twitter to approve the deal.

Twitter might let Musk off the hook for $1 billion, but he's paying something to get out of this.

The SEC reports says they estimate the bot daily active users (or something like that) to be 5%, but in fact could be much larger and it is merely an estimate. These leaves room for bot count to be much higher and they still would not have lied.

Go to the statement (10-Q I think) and you'll see caveats and conditional statements that are rather clear the estimate was not in anyway definitive or even methodologically sound. They said that. My man Elon is so focused on numbers that he doesn't read the fine print. Certainty intervals matter, even if they're described with words rather than numbers.

Yeah, that is the part I'm referring to. Agreed, that if he read the fine print that he would be litigating this much differently, or at least in his public statements. From the change in strategy, it appears his lawyers are now just trying to claim that Twitter isn't providing some information... although, I'm not sure that they are required to verify any claims regarding bots based on their public filings.

His lawyers are claiming a technicality in the contract, specifically there _is_ a clause that requires Twitter to service any "reasonable" request for information to Elon. Theres 2 important things to keep in mind when judging the violation however:

1) Requests for information are assumed to be to facilitate _closing the deal_. Its not just for any willy-nilly request he wants.

2) It specifically is not to service "due diligence". This is the "open for interpretation" part. The contract _separately_ calls out that Musk has had the opportunity to seek information for due diligence, and Twitter has already fulfilled those requests to his satisfaction. So with that in mind, I would interpret the obligation to service information to be limited to things e.g. related to acquiring financing, or to fill out paperwork etc.

The SEC filing very specifically explains that Musk has _already_ had the opportunity to seek any clarifying information needed, and is _already_ in agreement that no more information is needed to be satisfied with the deal. See my other comment about Section 5.11.

Irrespective of anything regarding Musk, Shouldn't transparency and Truth be sought from Twitter. Full Stop.

---

I recall when I interviewed there in ~2008?? Don't recall, and they asked me in the interview what I thought Twitter was: I stated "Twitter is a global sentiment engine thats able to take the pulse of users around the globe on any topic"

I didn't get the job.

> Irrespective of anything regarding Musk, Shouldn't transparency and Truth be sought from Twitter. Full Stop.

No. Twitter is not the press, nor is Twitter a public utility. Twitter is under no obligation to provide "Truth" or "transparency" to the public. It's a microblogging service, not the BBC.

Full Stop.

> It's a microblogging service, not the BBC. Full Stop.

*publicly listed. so they need to be transparent as far as market information goes, while not disclosing corporate secrets or breaching personal data regulations.

and the CEO said from the start that they cant disclose more details regarding their 5% assessment.

I think you're both right here - transparency and truth from Twitter should be sought, and they are under no obligation to provide it.

No, you're missing the fact that Twitter is a publicly traded company. If they knowingly provide false or misleading information in their filings, the SEC and likely the shareholders can go after them. It would be tricky to prove intent here, but there may be other risks. I'm not a lawyer.

They cannot lie in certain documents since they are a public company.

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