So it was a troll after all.
Listen, I was willing to believe I had called it wrong after the merger deal went through. Maybe Elon Musk was serious about a change! Maybe he really wanted to own a social network that also operated! Maybe Musk has really looked forward to giving himself stomach ulcers in connection with content moderation issues! People have done a strange 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 well Americans enforce their laws?
A quick summary: Musk is trying to make a runner on the Twitter acquisition, and Twitter has not. Twitter advocates up in the rawest possible way: with the firm that came with the poison pill. That company then filed a lawsuit against Musk for trying to force the merger to go through.
When the Twitter complaint dropped, my impression, on first reading, was that someone really had fun putting it together, not least because the screenshot of Musk’s poop tweet was included:
I love a good lawsuit. Can Twitter win? “He signed a contract, it says what it says,” said Tom Redburn, president of securities litigation at Lowenstein Sandler, after he finished laughing at my annoyance. Because Musk waived due diligence – that’s the case when you investigate the company you buy before accepting an acquisition – his ability to walk away from the deal is limited. “It’s a difficult position for a buyer to be in,” Redburn says.
In fact, Delaware’s Chancery Court, which is widely used by companies, tends to be rather unsympathetic to buyer remorse, Redburn says. There is a high-profile case where a buyer successfully got out of a transaction – and that was due to fraud. In 2018, the medical group Fresenius, best known for its American dialysis service, did not successfully buy the drug manufacturer Akorn because Akorn hid a whole lot of business problems. “Fresenius was able to prove that Akorn made his data,” Redburn says. To ville put something of a damper on a fusion!
This is a little different than a half-baked assertion that Twitter’s statement of improper activity is incorrect. Musk’s obviously malicious reason for getting out of the deal with Twitter is that there are too many spambots and the company will not give him the data he needs to determine exactly how many there are. Pathetic. While that’s true – and I have no reason to believe it is – Musk’s team still needs to show that it has a significant impact on the company.
“If you take the jokes out of it, this is not an atypical kind of lawsuit,” Redburn says. “We’ve seen a lot of this over the last couple of years.” During the pandemic, for example, private equity firm Kohlberg & Company tried to weave out a $ 550 million deal to buy a cake decorating company called DecoPac. The presiding judge, Kathaleen McCormick, ruled against Kohlberg, who became the proud (?) Owner of DecoPac in May 2021. McCormick is now that chancellor, which is what Delaware calls the smartest judge in the chancellery court.
Now I do not know that the Twitter case is necessarily going to court. It appears that Twitter is willing to reconcile, perhaps by demanding a payout higher than the $ 1 billion stated in Musk’s contract if the transaction did not go through. I suppose Twitter could renegotiate the transaction at a lower price, but if I were Twitter’s board, I certainly would not do it, because then you’re still in a deal with Elon Musk, and that shit is for sucks. Although I suppose there is empirical evidence at this point that the composition of the board is purely ugly.
But the mechanism for these results is the lawsuit filed by Twitter – it must remain obligated to be bought by Musk to get any kind of consolation prize. So the next fun part will be discovery. All that is needed is an e-mail or text message in which Musk admits that he is not serious about the agreement to nuclear his entire position. And because of Musk’s lack of impulse control, it strikes me as possible that someone made him say that.
So what are Musk’s chances? The well-known short sellers Hindenburg Research – you may remember them as those who claim fraud at the electric car companies Nikola and Lordstown Motors, which results in SEC investigations – have been on Twitter for a long time and in fact short-circuited Musk. Plus, Bloombergs Matt Levine, an actual lawyer, has combed the details of the case, and I have no intention of doing a better job. What I’m interested in, though, is a very annoying conversation I’ve had with people over the last many weeks: What silly nonsense made Twitter’s board take Musk seriously in the first place?
Every time I have asked this question, I have been given some sort of nonsense positions of trust. Basically, the idea is that maximizing shareholder value means that Musk’s obviously junk deals have to be taken seriously because it would be a lot of money for shareholders if it were real.
But that’s exactly what I mean !!!!!! Elon Musk famously says he wants to do a lot of things and does about a quarter of them – maybe fewer – and usually not on time. If you are sued for a buyout by someone with a history of poor impulse control, breach of contract and launch licenses, regulators ignore (remember “I do not respect the SEC”?), And bluffs that he will take his company privatelyyour common sense is to tell him to get lost. Wait and see if he will make the offer he threatened with or if he loses interest because something else new and shiny is coming. I mean, this guy became the father of 10 famous kids with how many women? This does not exactly indicate an ability to engage or, frankly, a lot of attention.
The more I think about it, the more angry I get at the stupid little lectures about positions of trust. Anyone who has followed Musk knows of his attempt to start a media company, without thinking about how to make money, and then immediately shut it down because it apparently bored him? I’m talking about the short term Thud, which was a bit like MSCHF, but without a business model. Musk came up with it because he did not buy The onion when it was for sale; Thud folded before it ever had a chance to do anything exciting.
So what is the right thing Twitter’s board should have done?
Well, of course, they need to consult with their financial and legal advisors. Board of Directors probably should have heard Musk out. But one thing that the board can then do is say “no ❤️” and get started!
Like yes, of course, maximizing value is very important to shareholders, but let’s look at how the stupid nonsense that Twitter’s board chose to do works out:
- Firings of key persons
- Rude tweets by Musk about Twitter employees, leading to harassment from his flying monkeys
- Stop long-term product development
- Distracts employees and makes the company a more uncomfortable place to work
- Expensive lawsuits
This is not what I would call maximizing shareholder value; it is to run the business in the ground and screw the shareholders in the process. Do you know what would probably have maximized shareholder value and also been very satisfactory? Asks Elon Musk to fuck of.