Only a handful of judges have ever forced reluctant buyers to close on an acquisition. One of them is Judge Kathaleen McCormick, the chancellor assigned to hear Twitter's case against Musk.
This makes it sound like the judge is an outlier. The situation doesn't come up very often. Most people who sign binding agreements to buy something intend to buy it. The face that she previously dealt with it is funny though.
I mean it's not completely random, this is exactly the kind of thing the Delaware chancery court exists to deal with... almost all of their docket is high-stakes shareholder stuff.
>But Twitter obviously owes it to its shareholders to demand the full $40-some-odd billion rather than settling for the $1B alternative relief — though given Musk’s antics, it’s probably in the best interests of the shareholders to take less and keep Musk’s hands away from the rudder.
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.
Presumably they mean that on net the shareholder would accrue value > $40B if they got some cash as a penalty, and continued to own a Musk-free Twitter.
For those shareholders that are bought out, you're right. He could squeeze their buildings and infrastructure into a giant paperweight and lay off everyone after middle-fingering the world in a final tweet, and those shareholders would have their cash and no say or care about it. After all, according to SCOTUS, the cash they get is their sole concern.
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.)
> Specific performance is drastic, and arguably unconstitutional in many contexts
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.
> 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.
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.
Courts routinely assess damages things for things like what profits the harmed party would have been made but for the wrongdoing which require projections of counterfactuals. By comparison, “$44 billion less however much the sum of all Twitter stock was worth at some designated time” is...not particularly difficult.
Also, to be clear, Twitter is not making a claim about how many actual human users it has - it is making a claim about how many actual human mDAU, or monetizable daily active users, it has. 90% of Twitter's users can be bots, as long as no more than half a percent or so of those are counted as mDAU.
Not only do courts order specific performance but the exact judge hearing this case ordered specific performance in a merger where the purchaser attempted to pull out claiming a material adverse change.
> 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.
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.
>"one expects that someone will prevail upon Musk to settle before that happens"
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...
There are plenty more less scrupulous options, like $x00mil in shitcoins to buy an amicable judgment. You could even go extreme budged and start popping Twitter lawyers at $1mil a head, nobody would want to represent them after aa couple of weeks.
The guy bought 10% of the company in secret after being a power Twitter user for 11 years and deciding he could unlock its languishing potential, and then gave them a take-it-or-leave-it, no diligence offer. I don't think Twitter was "selling" anything.
Except Elon Musk went to Twitter with a seller-friendly request and signed away his right to due diligence.
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.
Do you have evidence to the contrary? Or is your viewpoint fully driven by blind-faith alone?
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.
I have no dog in this race, it's between Musk and Twitter.
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.
I don't care either way. I don't like Twitter and I certainly don't like Musk either.
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).
Well, Proverbs says (paraphrasing) "When one party speaks, it sounds convincing, but when the other party examines them, then it doesn't sound so convincing."
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 is, the evidence we have in support is Twitter’s filing.
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.
Specific performance is perfectly constitutional in this matter, and you don't seem to understand that Twitter's representations were highly qualified, making it seemingly impossible for Musk to show there were material misrepresentations. You seem to be under the misapprehension that Twitter claimed there were 5% or less bots. This is not true. They never made unqualified claims about the number of bots.
How do I know this? I subscribe to Matt Levine's newsletter. He's a lawyer who follows this stuff for a living.
I learned a long time ago that doubting Musk is about as safe a bet as doubting Bill Belichick’s draft choices. Somehow, he always ends up winning, even when it looks like he might lose.
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.
His net worth has multiplied by a high number since then, largely thanks to the performance of Tesla stock. I don’t see any way to interpret that other than “winning,” if we’re measuring the result of his past decisions regarding Tesla or its financials.
I don't think we should measure the outcome of this incident by Tesla's stock performance in the years since, that doesn't really make sense. I never heard someone make a bull case for Tesla like, "in 2018, the CEO said he may take the company private, so it's a buy." That he was sued by the SEC and had to give up his chairmanship in the settlement seem like much more relevant ways to judge the outcome of this particular event, to me.
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.
Can someone explain to my why, if it's such a slam-dunk that Delaware will force Musk to pay $54.20/share for Twitter in October, why the current share price is just $37.74?
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…
> Can someone explain to my why, if it's such a slam-dunk that Delaware will force Musk to pay $54.20/share for Twitter in October, why the current share price is just $37.74?
(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.
> Can someone explain to my why, if it's such a slam-dunk that Delaware will force Musk to pay $54.20/share for Twitter in October, why the current share price is just $37.74?
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.
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.
People with money on the line actually know that people writing for these newspapers are clueless and not worth listening to. Unlike HN readers who keep posting and upvoting this stuff.
Because Musk could stall the deal, or refuse payment, or Tesla could crash before the desk goes through, or Twitter could settle with Musk instead, etc...
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.
https://bdnews24.com/world/americas/2022/07/15/judge-in-twit...