I’m sure many of has seen this article on the front page today. As the title suggests, I’m wondering if this changes, in your personal opinion, the likeliness of Musk acquiring Twitter.
Article for reference:
Elon Musk has a “right not to consummate” his acquisition of Twitter and a “right to terminate the merger agreement,” according to a letter from his lawyers to the Twitter general counsel Vijaya Gadde sent Monday morning.
Why it matters: While Musk has been tweeting about the deal being “on hold” for a while, this is his first formal, legal suggestion that his agreement to buy Twitter is anything other than legally watertight.
Between the lines: The letter from Musk is ostensibly about a dispute over data. Musk wants Twitter to provide him with information that will help him “facilitate his evaluation of spam and fake accounts on the company’s platform.”
The big picture: Thanks to the recent rout in technology shares, both Twitter and Tesla, which is the main source of Musk’s wealth, are worth much less today than they were when Musk entered his initial bid of $54.20 per share. That means Musk is overpaying for the company, with money he is going to have difficulty finding.
What they’re saying: “Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement,” the company said in a statement.
“We believe this agreement is in the best interest of all shareholders,” it added. “We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
The bottom line: There is zero chance that Twitter will simply accept Musk’s assertion that he has the right to withdraw from the agreement. If he tries to do so, things are likely to get messy.
Source: https://www.axios.com/2022/06/06/elon-musk-twitter
I know I have seen many posts on this board stating TWTR is a safe buy because Musk would face potentially huge lawsuits if he backed out. As it would be potentially way more than 1bn if Musk backed out.
The deal agreement not only includes a $1bn break fee if Musk does quit, but Twitter can also enact a clause that could force Musk to complete the deal at $54.20 a share. Section 9.9 of the agreement entitles Twitter to “specific performance”, whereby Musk has to pay up if he still has the debt-financing in place and Twitter still wants to close the deal. Twitter is in control here, Quinn said. “The remedy – a termination fee or specific performance is at the election of the company, not Musk,” he said.
Vanderbilt’s Ricks adds: “If Musk isn’t willing to close at $54.20 and if the parties can’t reach a revised deal or settlement, Twitter will very likely sue for specific performance.”Twitter, for its part, remains committed despite Musk’s behaviour. In a statement on Tuesday it said: “Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable.”
Source: https://www.theguardian.com/technology/2022/may/17/what-are-elon-musk-options-in-the-twitter-takeover-deal
Shareholders of Twitter are also already trying to sue.
Source: https://www.cnbc.com/2022/05/26/twitter-shareholders-sue-elon-musk-and-twitter-over-chaotic-deal.html
Seems like TWTR didn’t move on any of this recent news (from the first article, the other articles are older).
For those who believed this deal will happen no matter what, does this change anything for you? Or are you still acquiring more shares?
For those who doubted the deal from the beginning, does this change anything for you?
My personal stance was always he would try to negotiate lower, but this does not seem like a negotiation tactic to me.
