🐦 The Art Of (Remaking) The Deal
Not eight weeks since Elon Musk announced plans to buy Twitter and take it private, things are already (expectedly?) going haywire. For one, Musk himself wavered on the purchase, claiming concerns over Twitter bots and other fake accounts. And now a group of Twitter shareholders is suing the Tesla CEO for tanking the social media company's stock. “Musk’s conduct was and continues to be illegal, in violation of the California Corporations Code, and contrary to the contractual terms he agreed to in the deal” [to buy Twitter], the suit claims. Meanwhile, representatives for Musk claim Twitter is “actively resisting and thwarting” attempts by the billionaire to collect information before the deal is finalized.
The shareholders' suit alleges that, following the April 25 purchase agreement, “Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter’s stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price,” reports The Verge.
In a May tweet, Musk said “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”
But Twitter corporate refutes these claims, saying they “will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement,” adding that both the deal and their cooperation “is in the best interest of all shareholders.”
Since announcing the takeover, Twitter's stock has fallen by up to 30%, while it currently trades at around 25% lower.
How To Undermine
In questioning the amount of fake Twitter accounts, some believe Musk is attempting to build a case that the material terms of the deal as presented by Twitter are incorrect, and thus the deal is void. “What he is actually doing is a much more clever attempt to get out of the merger agreement,” corporate law professor at Tulane, Ann Lipton, told the New York Times. “If Twitter were really stonewalling information requests, and those information requests were necessary or reasonable for Musk to be able to get his financing — which is what he’s claiming in this letter — then that would conceivably be a breach that allows Musk to walk away.” However, Edward Rock, a corporate law professor at NYU says that “the merger agreement provides for information, with exceptions, but that doesn’t mean he can get any information he wants … what I don’t know is what information he is asking for.”
We here at the Lawtrades’ Newsletter desperately want to stop giving Mr. Musk so much attention, yet, so long as every word that comes out of his mouth has the power to throw the stock market into disarray and bring a titan of Silicon Valley to its knees, we cannot. That being said, it increasingly seems like Musk was trolling us with his Twitter purchase announcement, and we hope this takes the value of any of his future comments down significantly.