> The Court: In this case, Twitter seeks specific performance, and it is not at all apparent that damages could constitute a sufficient remedy to Twitter. https://twitter.com/chancery_daily/status/154943327265618739...
That's the judge implying that the remedy could very well be a forced completion of the purchase
And this dispute, while involving similar amounts of money, doesn't seem to have the same moral urgency to speed it along.
Because a sentence and how it is carried out are two (sometimes wildly) different things. Musk could lose the case and still drag the actual execution of his obligations for years.
Levine pointed out yesterday that some of the agreements Musk has in place to fund this operation will expire on April 2023, so he could wait until that date and say "whoops, I can't afford it now". I have no idea if that would stick but this case has been unusual since day zero.
The most important thing for Twitter is to get out of this mess, honestly, the sooner the better.
Basically all of Musks "money" is in the US, and much of it is even in Delaware Corporations. The judge can very easily extract whatever it takes from Musk if it comes to that.
* 13B from a party of banks (i.e. Morgan Stanley and friends), in exchange for who knows what (private equity?)
* 12.5B from pretty much the same party of banks but as a loan that takes Musk's TSLA stock as collateral
* 21B from Musk itself (idk under what conditions)
So he could easily "not afford it" if he wanted to.
Unless his net worth drops by about 75%, he can afford it.
If the court rules "the deal has to go forward" I don't see why other assets would be considered.
Also,
Net worth != seizable property.
Also,
Net worth >> real net worth > realizable assets > seizable assets.
To be honest, if Musk were ordered to pay the $44B today, out of his pocket, I don't think he would be able to.
All I'm saying is, even if Twitter wins (which I think they will, in the very long end), there's a long road between that decision and having the actual money (or stock or w/e) land in their hands.
On top of that, there's no way Musk could go to jail because of this (it'd be very hard to prove there was wrongdoing behind this), so there really is no pressure on him to pay the $44B, he could drag this on foreeeeveeeeeerrrr ...
If he won't cooperate, he could be jailed for contempt (they don't need to prove wrongdoing during the deal, disobeying a court order is itself enough). They could also probably just send a court order to his stock broker.
Having that second deal in place convinced the Twitter board that Musk had the money and the liquidity to pay the amount he offered for Twitter, but otherwise that deal is irrelevant for this case.
[0]: https://www.bloomberg.com/opinion/articles/2022-05-26/elon-c... (paywall bypass at https://archive.ph/e95rj)
On the contrary I think the most important thing for Twitter is to get $54/share for its shareholders, and liquidate. There is no alternative path with an exit anywhere near $54/share.
They might have a number in mind that they're aiming for to back away - say $10b. They might also have him agree not to start a potential competitor for 10 years.
On the flip side they might think the markets will remain down for some time and the premium price is worth going full scorched earth on Musk. In that case he'll have to eat some punitive financing costs or file bankruptcy - most likely the latter because I can't see him giving up his stake in Tesla and SpaceX.
> If they force him into bankruptcy they aren't going to get $44b.
Why not? He appears to still have the non-financed amount well covered by his Tesla, SpaceX, and other assets. Even if markets implode much further they'll still be able to recoup much more than the $1B cost Musk is hoping to get away with.
As described above, if the conditions to Parent’s and Acquisition Sub’s obligations to complete the Merger are satisfied and Parent fails to consummate the Merger as required pursuant to the Merger Agreement, including because the equity, debt and/or margin loan financing is not funded, Parent will be required to pay Twitter a termination fee of $1.0 billion.
Now, that said, there are likely to be good commercial, legal and practical reasons for them to settle this case, even if they win on specific performance. But the optics are terrible for Twitter’s board, and they’re all gonna get raked over the coals in the forthcoming shareholder litigation (which in inevitable regardless of how this winds up playing out).
If Musk gives some smaller amount of money, though still several billion, but the shareholders still own the company, that's not going to be too hard to sell as a win.
So to the extent Twitter is currently worth less than $44 billion and there’s a binding merger agreement that delivers $44 billion of value to the shareholders, the board has to do something to bridge that gap. A billion-dollar break fee ain’t gonna cut it. But sure, if at the end of the day the shareholders can retain ownership of Twitter, Inc. worth $25 billion (and the value of the company hasn’t been irreversibly impaired by this circus) and extract a $20 billion settlement from the acquirer, then were I a Twitter board member, I wouldn’t feel too worried giving my deposition about that outcome.
Still not a great look for anyone though.