Twitter Complaint Demonstrates That Every Lawyer Is Smarter Than Musk
abovethelaw.com
abovethelaw.com
https://bdnews24.com/world/americas/2022/07/15/judge-in-twit...
I don't understand this. If Musk buys the company for $40B, then what do the current shareholders care whether he does a bad job of running it? They won't be shareholders anymore! They'll have gotten their $52.40 per share and will have no more (financial) interest in whether Twitter does well or not.
Have I misunderstood the situation somehow?
Bit of a throwaway line though.
The shareholders who go private with him, may care, but that's between them and him. Interesting if they would go against the merger.
If you get in bed with Musk, expect some procreation, I guess.
The ATL blog post from Joe Patrice seems to hinge its argument on two things: (a) specific performance is a major threat and "one expects that someone will prevail upon Musk to settle before that happens" (emphasis in original); and (b) due diligence was waived so Musk doesn't have a leg to stand on (Patrice is "flummoxed by Musk’s theory that he’ll ever see this data in court [because h]e waived diligence").
That's a weak argument. Specific performance is drastic, and arguably unconstitutional in many contexts (albeit not this one most likely), so courts almost never order it. Additionally, waiving due diligence doesn't grant the seller free rein to provide material misrepresentations. If Twitter is making a claim about how many actual human users it has (which it is doing by providing the number of users and saying 5% or less are bots), and that claim is materially false, that's the ballgame.
(AboveTheLaw tends to be long on cheerleading and snark, and short on legal analysis, particularly when an issue presents itself as GenZ fan faces versus The Establishment, something you can see by reading their many other articles.)
(Disclaimer: IAAL but IANAMAL. My comment here has a modicum of insight over a random layman but is emphatically not the opinion of an expert or practitioner in this particular field.)
Your link has nothing to do with any statement you made.
My question is "Settle how?" Pay a penalty and still not own Twitter? That seems like an unlikely outcome to me. Why would he do that? Why would he not simply complete the transaction instead?
Pay $1b and walk away is his best outcome. That's if he wins. If he loses, he may have to pay $50b for something worth $20b. Settling will be somewhere in between - maybe paying $10-15b to walk away.
Of course, if he settles, it will be with a sealed agreement. And then he can publicly claim victory...
No, his best out come if he wins is he pays nothing because Twitter lied about what they're selling.
Twitter never "lied" about anything. Heck, they barely negotiated anything at all. Elon Musk arrived, bought 9% of the company (and had a number of SEC violations while doing so since he didn't file various forms in time), and then threatened to enter into a hostile takeover of Twitter.
We all saw the public moves Elon did upon approaching Twitter on this subject. Or have you already forgotten his major announcements just 3 months ago and the drama about being a "Free Speech Absolutionist" or whatever he was calling himself?
Twitter wasn't looking for a buyout. Period. Elon went to them. That's obviously what happened here.
That is, the evidence we have in support is Twitter's filing. Taking that as authoritative, or even unbiased, is a mistake.
And, it's not going to matter who approached who. What's going to matter is the words of the signed agreement. Everything else is irrelevant.
Mind you, you're not necessarily wrong. But... back in the day, I spent a lot of time following SCO v. IBM. Public announcements of a deal don't always give a good idea of what the deal actually looks like.
That’s not entirely true. The evidence referenced in Twitter’s filing is largely the already public merger agreement and independently verifiable public statements by Musk.
> Public announcements of a deal don’t always give a good idea of what the deal actually looks like.
On the other hand, the text of the merger agreement filed with the SEC for the acquisition of a public company better give a good idea of what the deal actually looks like; there are, after all, laws about that.
https://www.sec.gov/Archives/edgar/data/1418091/000119312522...
Both sides have their arguments, I couldn't care less which side "wins".
The only thing I wanted to point out is that the best case is clearly Musk walking away without paying $1B. That's why this is going to court, a B represents a lot of zeroes for lawyers to at least get a taste of fighting over.
But given what I know about the subject, there's an "obvious" element of justice, who is right or wrong in this situation. Given everything Musk has said, and comparing it against what Twitter has said, I'm inclined to believe Twitter's argument over Musk's so far.
Maybe Musk is holding back his best arguments for court, which is a possible strategy. But everything he's revealed thus far is... pretty bad? Like, poop-emoji bad.
I presume that's what this discussion is about after all? Evaluating the arguments the two sides have brought forth so far? Why else would we be talking about this subject? I mean, both sides are pretty much tweeting their arguments into the public sphere. We certainly have enough to discuss on the subject already (IE: Whether there's elements to disbelieve in Twitter's statements so far, or vice versa for Musk's statements).
His best case is he countersues Twitter for defamation and wins, and ends up not buying Twitter and getting a huge pay day.
Realistic? No, but if we aren’t constrained by realistically likely outcomes and only “best cases”...
How do I know this? I subscribe to Matt Levine's newsletter. He's a lawyer who follows this stuff for a living.
That would be a major change from the old days. Back before Gen Z was old enough to get a job, ATL was a blog run by a woman named Ellie. It was aimed specifically at BigLaw associates and was total snark all day, everyday. If you saw something there you didn’t see elsewhere, there was a 99% chance it was inside info from one of the associates on the case.
Specific performance is not all drastic (and not remotely arguably unconstitutional) in the case of agreements to transmit specific tangible or intangible property.
It is impermissible, and often argued further to be a violation of the 13th Amendment, for personal services contracts, but that’s not even remotely at issue here.
Now, arguably, since Musk’s end of the deal was to pay cash while Twitter’s end was to provide specific property, you can make the case that specific performance cannot be justified because Twitter can be made whole by a damage award, to wit, via compensatory damages equal to the difference between the amount of money Musk offered and the value of 100% of Twitter stock at the time damages are assessed.
> If Twitter is making a claim about how many actual human users it has (which it is doing by providing the number of users and saying 5% or less are bots), and that claim is materially false, that’s the ballgame.
That’s rather imprecisely worded (aside from also drastically factually misrepresenting the content of Twitter’s bot-related claims), and resolving that sloppiness in a way that is tolerably approximately true (aside, again, from the misrepresentation of what Twitter has actually claimed), “materially” is doing a lot of work in that sentence.
This sounds difficult to assess - the possibility of damages being awarded should itself be affecting the stock price. E.g. if you were 100% assured of a payout of $52.40 - stock price, the stock should trade for $52.40... but then the damages would be $0.
Please don't truncate a quote so you can strawman someone.
But who knows, maybe this time will be different. I doubt it though. I don’t understand why people think involvement of the court system spells the beginning of the end for Musk. On the contrary, it’s a $44 billion deal (for now lol); when it comes to negotiation, the courtroom is part of the battlefield. Just a few months ago, the Twitter board was refusing Musk’s bid to buy Twitter and even discussed a poison pill to stop a hostile takeover. Now, that same board is taking Musk to court, trying to force him to buy Twitter. So who is really losing here? And who is in control of the situation?
btw, has anyone seen @jack lately? I think he and Musk might be up to something.
I'm genuinely asking, and not being glib.
This standard ought to work in reverse too, right? If he was winning from 2018 to the end of 2021 because Tesla stock was skyrocketing, surely he's been losing since the beginning of the year as the stock has been plummeting. Otherwise, we would have defined "winning" in a way where "losing" is impossible, which would be a meaningless exercise, wouldn't you say?
If you believe that Tesla's poor stock performance since the beginning of the year isn't per say Musk's fault, it's just the market environment, I'd agree with you. But the same is true, at least in part, of Tesla's bull run. It coincided with a broader bull run in the market and tech stocks in particular.
Musk's purchase price is a 43.6% gain over the current price. Based on the comments here on HN (and everywhere else), that's the world's easiest trade.
So, what's up? The market seems to be acting like it's not a slam dunk, yet every reporter, HN commenter, Twitter user, etc. believes that it is.
Shouldn't people be buying Twitter stock like crazy? Something doesn't add up…
Even if it was 100% chance of 43% upside, how long will this take?
If it stays in court for 4 years like some Oracle cases and you expect to make 9% per year nominally on your existing portfolio strategy, there’s no motivation to switch strategies.
Because the market (aka investors) doesn’t believe it’s a slam-dunk that Delaware will force Musk to pay $54.20/share for Twitter in October.
The share price hasn’t been anywhere near the deal price recently. Thus far the market’s skepticism about this deal closing has been right.
(1) No one, or very close to that, ks saying it's a slam dunk that Twitter will get specific performance, but many people are saying that there is an extremely high risk that Musk will not get to walk away from the deal with no cost (and several people are saying the opposite), and
(2) even if the consensus of legal experts was as you describe, “People competent with analyzing legal analysis” and “people with money and inclination to invest in Twitter” aren't the same group.
> So, what's up?
You are misreading what mos people are saying, and making the common mistake of assuming that any knowledge that anyone in society has must immediately be reflected in the market price.
This is what happens when you think you're the smartest guy in the room, and it's not your room.
Some big controversial thing happens between entities that nobody fully understands, and a million Very Intelligent® analysts and columnists with every pertinent qualification and a good vocabulary of ten dollar words tries to tell us that yes, they are qualified to predict what will happen and you should just take their word for it.
And predictably, people just pick whatever set of sentences they like the sound of and parrot them endlessly.
And, surprisingly more predictably, the outcome is never what any of them said.
Could musk lose? Yes. But I guarantee you, the final reasoning of the ruling will differ significantly from any of these people's analysis. You're basically flipping a coin as to who ends up right.
How many things like this have happened over the past decade? How many of those oft touted analysts were right? Being generous, it's significantly less than half, which means they're worse predictors of outcomes than a coin flip. And how many of us picked a side, parroted our favored talking points, selectively remember how things played out and reinforce our misled world views? And here we go, all ready to do it again.
The truth is, this case is going to play out how it is going to play out, none of us know really what's going to happen, it's mostly inconsequential to us and it's all basically just sportsball.