I don’t think there’s any world where that happens.
I think a judge would either order specific performance (e.g. do the thing the contract says, as specified in the contract), or we’re talking about damages (e.g. pay Twitter $X, but you don’t get anything in return).
I think a purchase at a lower price would probably only come from a settlement between the parties, and… I think that’s likely. Twitter didn’t want to be purchased in the first place, and now has Musk over a barrel. I think Twitter is going to use the threat of specific performance to try and extract a damages settlement greater than the contractual $1B from Musk.
I agree there won't be any meet in the middle. Neither Musk nor Twitter want Musk to own Twitter now though. What's happening today is negotiating the break up fee which starts at the difference between current market cap and 54B (~22B today).
The accelerated trial date put Musk on notice. The SEC may not take enforcing the rules seriously, but Delaware has made it their business to enforce the rules that make it attractive for big corps to incorporate under. I don't think this makes it to trial where Musk will get destroyed, and bet they end up settling in the ~10B range.
Musk got himself in between a rock and hard place here. Either he has to buy Twitter at a higly inflated price with all kinds of efdects on his Tesla shares and, maybe, even SpaceX ownership. And he looks like a bad business man.
Or he vets out of the deal, has to pay billions for nothing and still looks like a bad business man.
Since all his wealth is based on Tesla, and more specifically on Tesla's public perception as tech company and not a car maker, all of which in turn is based to significant extent on yhe public's perception of Musk as a genius, this change in public perception is incredibly dangerous for Musk.
Musk already looked like a corporate bottomfeeder to anyone who was actually paying attention to his behavior.
You're right, though. Obviously, other facets of this situation were going to affect Tesla, but I hadn't really thought about the effects on Musk's reputation could impact his companies' share prices. TSLA is as much a cult of personality as it is a stock.
Why settle for only $10B? Musk's shenanigans have resulted in significant long-term damage to Twitter in the form uncertainty and distracting Twitter from focusing on operating and growing the business (because they've changed internal policies / direction, and shared a lot of information with Musk, as per the acquisition agreement).
It's only fair for mullosk to be on the hook for the full purchase or at the very least the full differential.
$10b cash will go a long way to remedying that damage. They might even not ban Musk's account as a show of goodwill. Let him continue to bloviate impotently about the evils of censorious social media.
There's value in ending it sooner than 2 mos. for the reasons you bring up. I'm sure the court is also encouraging them to settle. While the court has forced transactions to complete before, I'm not so sure they want to be forcing a 54B transaction to go through. 10B would be ~$13/share that Twitter could 1-time dividend if they chose.
> I think Twitter is going to use the threat of specific performance to try and extract a damages settlement greater than the contractual $1B from Musk.
Yeah that's what makes the most sense. Musk doesn't want to buy Twitter anymore, forcing him to buy it is not a very good solution. It's possible to do, and certainly enforceable, but not a desirable outcome for anyone.
But, having him pay $10 or even $15 billions as a price to renege on his word, on the contrary, is an excellent outcome.
Presumably if the fine is bigger then the delta between the current share price and what Musk offered, he'd be better off buying the company and then trying to turn around and sell it then paying the fine.
Similarly, if the fine is smaller, Twitter share-holders would be better off just forcing him to buy and forgoing the fine.
So a settlement number seems kinda hard to agree on, unless they have differing opinions on what the company is currently worth.
> Presumably if the fine is bigger then the delta between the current share price and what Musk offered,
Not necessarily. There's a world where Musk really can't get the financing together, and stumping up the $44B in cash is too much of a hurdle to be worth-while.
Imagine, you could either pay $1,000 as a fine, or spend $10,000 on a car that you're pretty sure you could sell for $9,200. Obviously, in absolute terms you're better off buying and selling the car. But if you only have $5,000, it might not be worth the hassle to raise the other $5,000 to be able to buy then sell the car. Not to mention the risk that once you get the car, and go to sell it, there's a chance it only sells for $8,800.
If I were a Twitter share-holder, I'd be fine with getting a slice of a $10B settlement, keeping my stake in a successful social media & analytics company, banning Musk's account, and watching him squirm. I don't know if it'd be a perfect financial move, but it would feel good.
True. However there is a distinct possibility that Musk could run Twitter into the ground out of spite, if he's made to buy it. So there's a negative externality to force him to buy.
A fine close to the spread, but still a bit lower, accounts for that.
There was a good article the other day, I'll see if I can find it, that breaks down why legally Musk can't really be asked for specific performance since he's an individual.
It comes down to anti slavery laws
so probably not enforceable, though he could be fined.
Well, the agreement has Musk making personal financial guarantees.
So, it’s like the thin shell company has agreed to the deal, and Elon Musk has personally guaranteed the financing.
Which means the only specific performance the judge would be mandating from Elon Musk personally would be financial payments. The actual purchasing and paperwork would be done by the shell corporation. The only thing Elon Musk would be ordered to do in his personal capacity would be to write a large check (which, seems to be well within the remit of a judge’s authority over a person without raising 13a concerns).
Like, I agree that ordering specific performance for painting someone’s house is a bit odd and might raise those questions. But, Elon Musk’s only requirement as an individual under this contract is to write a check.
To be honest, I’m pretty skeptical of the analysis of the article you cited. The article says: “ Unfortunately for Twitter, it isn’t Elon Musk Inc. but Elon Musk the individual who offered to buy the company” which is wrong.
I think a judge would either order specific performance (e.g. do the thing the contract says, as specified in the contract), or we’re talking about damages (e.g. pay Twitter $X, but you don’t get anything in return).
I think a purchase at a lower price would probably only come from a settlement between the parties, and… I think that’s likely. Twitter didn’t want to be purchased in the first place, and now has Musk over a barrel. I think Twitter is going to use the threat of specific performance to try and extract a damages settlement greater than the contractual $1B from Musk.