Worse still, Twitter should earn $ 1 billion by letting Musk go, as lowering the price or lowering everything without penalty could break their job for shareholders.
It is clear that Elon Musk no longer wants to buy Twitter Inc, at least not for the price he negotiated. But Twitter should not go without at least $ 1 billion - and much more - on this issue.
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Musk's bid for Twitter TWTR, + 2.49% has become one of Silicon Valley's weirdest M&A sagas ever seen. Here’s a quick recap: Musk bought Twitter stock, agreed to be on the board, rescinded the deal and made a bid to buy the company and keep it a secret, and that bid was accepted. However, with prices falling sharply in the overall market downturn, Musk has obviously regretted buyers and says the deal is "suspended."
One problem with that movement is that it does not exist.
"There is no step in the process of closing down a company called a 'suspended contract,' no 'fixed contract' built on the agreement," said Stephen Diamond, an associate professor at Santa Clara University School of Law.
Sometimes it is difficult to know what is true when you work with TSLA of Tesla Inc., + 5.14% chief executive officer, but one thing that is really clear is the truth in this case: Both parties are contracted and legally bound. Musk is fishing for reasons he could back down from paying $ 44 billion to a company that would be fortunate enough to trade part of that amount without a bid - and trade at about 30% lower even - but may hope to avoid a $ 1 billion split. part of the contract.
"Having cold feet is not a sufficient basis for withdrawal… .so it is possible that at this time if he really wanted to he would have said so, and they would have demanded a divorce," said Diamond, adding that most of what Musk was doing. more recently the sound of "gaining the power to negotiate a treaty."
That noise has centered on the number of bot accounts on Twitter, Musk believes, exceeding the 5% mark Twitter has carefully cited in its inclusion with the Securities and Exchange Commission. Musk said over the weekend, without providing evidence, that bots actually account for anywhere between 20% and 90% of Twitter users.
Twitter chief executive Parag Agrawal showed Musk how he could use real evidence and knowledge of the inner workings of social media in a discussion of bots on Twitter after Musk made a lot of noise. Musk, in response, sent Agrawal a poop emoji, directly indicating the level of speech he could have on the subject.
If all of this seems to you to be something that should have been rushed into the proper care part of the contract process, you are wrong. However, Musk relinquished his right to act responsibly on Twitter before signing the agreement, as revealed in a SEC Twitter file explaining the acquisition filed Tuesday morning.
“Mr. Musk also disclosed that his procurement proposal is no longer subject to financial finalization and proper care of the business, "he tweeted as he explained how the agreement had been reduced.
Musk also does not read about bots on Twitter for the first time. As Diamond notes, Musk cited resolving the bot problem as one reason he bought Twitter in a news release announcing the deal.
"Isn't it all about buying it to make it better, to improve it?" Asks Diamond.
It may help to repeat it here, and use the metaphor. Musk's actions are like that of an ordinary person who agrees to withdraw all emergencies in order to buy a house, sign a house contract while publicly announcing "I'll fix this place in the current dump", and decide at the time of closure that the house is a waste disposal site.
So what should Twitter do with Musk? Let me ask you what you can do as a real estate agent in such a situation: Let the buyer go, sell the house to the buyer at a discounted price, or hold the buyer's feet on the fire and get the full amount guaranteed in both contracts. signed?
On the Twitter board and its management, they should proceed with the agreement as agreed, and should not ignore Musk's actions, which may violate certain legal lines, until they are able to close the agreement. At the very least, Musk will have to pay $ 1 billion if he is found to have violated the agreement.
Moreover, as his recent actions on Twitter may be regarded as undermining the company, he admitted that he would not do it when signing a merger agreement, he may eventually face other legal action on Twitter.
"They do not want to sue the boy, they want to sell the company," said Diamond. “At the end of the day, how many cases are there? They will focus on moving forward with the agreement as agreed, and that's it, and let Musk try to find a way to negotiate a price again. "
And the board may want to do more than that. If Twitter raises its end of the negotiations and Musk does not do so, the board may sue him for "direct performance," which could force him to continue earning as stipulated in the contract, if successful. While that may not be the case and it could lead to a long and arduous legal battle, your threat could lead to a $ 1 billion settlement and it seems clear that Musk will be indebted to the state. Diamond noted, however, that the addition of a specific, unusual performance clause, is an indication that Twitter knew Musk could behave in this way.
The Twitter board owes shareholders every penny they can get out of the pocket of the richest man in the world and then puts it in the company, its investors and its employees last month. It is their duty to do so, and Musk has given them every reason to stand firm against him.
