back to article Twitter claims Elon Musk bailed from sale with 'invalid and wrongful' reasons

Twitter has fired back at Elon Musk's allegations the microblogging network is in breach of its agreement to be acquired, claiming the billionaire is the one at fault and vowing to see the deal through to a conclusion. That stance emerged today in a regulatory filing [PDF] that includes a letter from Twitter's lawyers to Musk' …

  1. Gene Cash Silver badge

    Hm, considering how predatory and anti-consumer Paypal and Tesla are, I don't think he'd improve Twitter... but I do love seeing someone jerk them around, and I do enjoy hearing a lot of them lost jobs. Now they can get more respectable employment beating up grandmothers for protection money.

    They force me to refresh several times to get even an approximation of my latest tweets, thus inflating their pageview stats, so I can see Musk's point.

    I've basically dropped them and haven't looked at Twitter in a week and a half. As far as I'm concerned, they're as pointless as Slashdot, Tumblr, or Myspace now.

    1. Flocke Kroes Silver badge

      Musk ran X.com. Peter Thiel ran Cofinity. The two merged into Paypal which was run by Musk until he was fired. Thiel took over then Paypal was bought by eBay. Musk owned a large portion of Paypal until the sale to eBay and as far as I know, he has not owned a significant portion of Paypal since. You are welcome to have any opinion of Musk, Thiel and Paypal that you want but please do not associate Musk with the huge rise in the value of Paypal that massively boosted his wealth.

    2. Valeyard

      They force me to refresh several times to get even an approximation of my latest tweets, thus inflating their pageview stats, so I can see Musk's point.

      this is where it all derailed. you lambast twitter so much... and then talk about your account there

      no one's actually forcing you to do anything, just free your soul from the angry shouty place.

      1. Grooke

        Not only has an account, but obsessively refreshes the app just to re-read what they just wrote. Probably couldn't stop if they tried.

      2. Anonymous Coward
        Anonymous Coward

        If only they peered behind the curtain of how scummy Twitter really is, how they don't just control a few messages but decide the the news that gets through the obsessive, compulsive Gen-Z types glued to their phones instead of using proper new services. Oh wait, Twitter killed all the news services by drawing every sucker in and removing any supposed need for the truth.

        Anyone who actively uses Twitter for anything more than watching a few hobby news threads like video games or sports, should seriously reconsider why they would make use of such a vile platform.

        1. Korev Silver badge

          If you follow the right people then Twitter can be useful. I mostly follow scientists and HPC folks and learn a lot.

    3. LybsterRoy Bronze badge

      WOW! A week and a half.

      Errr - what's Twitter?

  2. Anonymous Coward
    Anonymous Coward

    Pay up + interest

    Well he's citing "material adverse effect", which are things that could not be foreseen at the time of writing the purchase contract, that have a material (major) impact.

    Bots percentage double checking clearly isn't a surprise item, he could have written it into the contract.

    He hasn't shown any of his claims to be material, despite having prompt API access.

    He said 100 sample would be enough originally, so the original API limit would have been fine.

    He changed his tune to want the API limit removed.

    Twitter gave him full API limits promptly after 7 days. 7 days is prompt however much he claims otherwise.

    He changed his tune again, to 'failed to raise the limit promptly enough for his liking'.

    He has a contract, his whim does not come into it if he did not write that into the contract.

    Twitter has been more than generous to him, despite clearly looking for reasons to get an out, they've humored his games anyway.

    It's all shit. He clearly wanted to swap some overpriced Tesla stock for overpriced (but more etherial) Twitter stock. At the end of the day Tesla makes and sells cars and will have to compete on multiples that car manufacturers are valued at. If he swapped some Tesla stock for Twitter stock, Twitter could potentially have more upside and so be priced at a higher multiple. He could jump from one overpriced stock, to the next overpriced stock.

    But the timing didn't work out and none of it is Twitters problem.

    They'll simply add interest to the deal.

    1. localzuk Silver badge

      Re: Pay up + interest

      Not only is the bot percentage claim not a surprise item, but he explicitly tweeted about tackling bots as being a reason for buying Twitter... So, Twitter have his own written evidence that he knew about the bot issues on Twitter in advance.

      1. Anonymous Coward
        Anonymous Coward

        Re: Pay up + interest

        Twitter encourages the writing of bots.

        Search for: "How to create a Twitter bot with v2 of the Twitter API"

        There are bots with different aims - some harmless (like old roadside pictures) and some nasty (like foreign agents trying to sway an election).

        I presume the 1M+ a day newly created bots removed by Twitter are of the nasty kind.

        I'd like to see a Twitter estimate of the harmless & nasty bot accounts % wise.

        1. pluraquanta

          Re: Pay up + interest

          This is where Musk (and most of the media) seems to have gotten confused. Twitter's 5% bot number was from "monetizable daily active users", i.e. people. What they're saying is that 5% of the accounts that are supposed to be actual people tweeting with their fingers are actually scripts trying to look like people.

          Musk is looking at all accounts on Twitter and seeing all the bots run through the Twitter API, but those don't get served ads so they don't affect the ad revenue.

        2. stiine Silver badge

          Re: Pay up + interest

          They don't know how many bots there are.

    2. vtcodger Silver badge

      Re: Pay up + interest

      Let me see if I have this straight:

      Musk offered to buy Twitter at $54.20 a share and signed a poorly crafted contract (crafted by whom BTW?) to do so. But Twitter has subsequently lost a lot of (perceived) value and is now only worth $32.65 a share.

      Not surprisingly Musk wants out. Anyone would.

      Instead of paying the $1B cancellation fee he agreed to and perhaps negotiating a new (hopefully better specified) deal at around $26.4B. Musk is going to kick and scream and hold his breath until he turns blue.

      Possibilities:

      1. Musk is really as childish as it appears.

      2. Musk is engaged in extortion hoping to get a better deal by threatening to drag Twitter through the notoriously erratic, slow, and expensive US court system.

      3. Musk is stalling for time because he expects Twitter stock to be worth even less in a year or two. (In that case, why not short the stock or buy out_of_the_money put options)?

      4. Musk's finances are a shambles and he can't actually find (or borrow?) $1B to get clear of the deal. I'm willing to believe he's leveraged to the hilt. I'm skeptical that finding $1B in his current situation is that big a deal.

      5. Something else? What?

      === Tangential Question

      Why would any individual who values their sanity want anything to do with Twitter?

      1. Jellied Eel Silver badge

        Re: Pay up + interest

        5. Something else? What?

        The case goes to court, which finds Twitter materially mislead investors. AFAIK Twitter and a lot of other antisocial media are mostly valued based on their user numbers. If those users aren't real, then neither are their valuations. Twitter says <5%, Musk thinks >5%, and at the moment the 'evidence' is being presented via.. tweets.

        But such is politics. I'm not a fan of either party, but Musk may actually have a point. Which may become pointless, depending on potential trial outcome. Which could get interesting. Presumably if Musk 'wins', the court might determine he could walk away from the deal. Or maybe re-price it, but then force Musk to complete the acquisition. But then if the court proves Twitter had historically mis-stated it's legal filings and underreported 'fake' accounts, Musk may end up owning a company facing litigation from other investors who could also argue they were mislead.

        Plus it's exposing the Emperor's wardrobe. Musk already bought a chunk of Twitter stock and arguably overpaid, especially if Twitter's share price keeps falling. His antics have also depressed the value of Musk's piggy bank, Tesla, which funds pretty much all Musk's other ventures.

        1. Charlie Clark Silver badge

          Re: Pay up + interest

          He may have a point but Twitter also has a contract where Musk essentially waived a lot of rights.

          He'll push this to the courts and hope it drags on so long that an out of court settlement can be agreed on. All the while he'll benefit from the possibility.

          The SEC should really investigate the thing and possibly sanction Musk so that he can't fuck with the markets as easily: it's one thing taking the piss out of a company, quite another offering the buy and then trying to withdraw. That's manipulation pure and simple and should carry the threat of time in jail.

          1. Jellied Eel Silver badge

            Re: Pay up + interest

            He may have a point but Twitter also has a contract where Musk essentially waived a lot of rights.

            So says Twitter. So perhaps the contract is based on a value, that's based on believing the data supplied by Twitter to both Musk's advisors, and the markets is accurate. If it's not, then the contract may be invalidated by a court.

            It's the place to go, if you believe the contract is unfair/invalid.

            He'll push this to the courts and hope it drags on so long that an out of court settlement can be agreed on. All the while he'll benefit from the possibility.

            Not convinced. I guess the main benefit would be if he could re-negotiate the sale price. Otherwise he'd still have overpaid for the Twitter stock he'd already purchased, and has lost a huge pile of funny money due to the fall in both Twitter and Tesla's share price. Unless he's hedged by shorting both companies..

            The SEC should really investigate the thing and possibly sanction Musk so that he can't fuck with the markets as easily:

            Sure, but that would assume the SEC takes an interest in market regulation. Or could prove it was Musk's intent. Or it could investigate Twitter, if there's evidence it misrepresented it's spam-bot problem in it's statutory filings. So kinda having to determine which was the worst market manipulator.

            Also curious how that kind of case would go. A problem with Musk and his reality distortion field is he can move markets with a single tweet.. Especially when much of the media & his fanatical fanbase tend to amplify any effects. So I suspect that would be back to proving intent, ie Musk was just trolling Twitter or deliberately manipulating share prices for personal gain.

            (And also really curious about the intersection between die-hard Musk fanatics, and Twitter fanatics, ie the level of cognitive dissonance between the far-left who champion both.. Plus there may be some fun timing issues. Yesterday, SpaceX did some tests on it's 'orbital' launch pad's fire safety procedures. It's edging closer to seeing if Starship actually flies, and if not, it'll have a market impact.. Especially as Musk still needs it to start launcing his Starlink 2 satellites.)

            1. Charlie Clark Silver badge
              Facepalm

              Re: Pay up + interest

              When it comes to publically traded companies you don't have much protection. Musk initiated the proceedings and was happy to sign the contract under the terms negotiated with Twitter. Legally, that doesn't give him much to work with, which is probably why he's not going to court but Twitter is. He may hope he can sit this out, and maybe he can, but his actions may well turn out to have to be shown to have affected the share price in a "pump and dump" way, which would leave him personally open to civil suits from Twitter shareholders.

              Personally, I don't care much for Musk or Twitter – why does it still exist as company, but then again why is Groupon still going? – but there are rules in place for this kind of thing. As for bots, of course, there are millions of them. I wrote my own Twitter bot back in 2011 and had some fun with it annoying people who took the thing seriously and it still has followers!

              1. Jellied Eel Silver badge

                Re: Pay up + interest

                When it comes to publically traded companies you don't have much protection. Musk initiated the proceedings and was happy to sign the contract under the terms negotiated with Twitter. Legally, that doesn't give him much to work with, which is probably why he's not going to court but Twitter is.

                I'm.. less convinced. So suppose we write a contract where you agree to buy a silk purse from me. I deliver you a somewhat chewed sow's ear. Or maybe the long running saga of HP vs Autonomy, where much the same point was argued, albeit post-execution. HP successfully argued they didn't buy what they thought they were buying, and a contract still needs to be 'fair'.

                I'm also not reading too much into who initiated proceedings. I'm guessing Twitter pretty much had to given the execs have a duty to maximise value, and the initial offer represented a lot of value. Also curious if there are elements of defamation in the claim given Twitter is an entity/identity. So Twitter's board pretty much had to, else would probably be sued by investors who wanted $54.20.

                I guess the fun now is Musk's defence team would be entitled to discovery, and would end up with the data Musk says he wanted, and claims Twitter refused to supply. So it'll be interesting how each party's experts interpret those numbers, If team Musk can find >5% bots, it could get awkward given the public filings. If so, they could argue Twitter materially misstated their performance, which could be fraudulent.. Which also 'pierces the corporate veil' and could leave execs with some liability, but would probably invalidate the contract.

                So popcorn will be needed. Especially if Twitter decides to deplatform Musk and ban his Twitter account for defaming the company. I'm kinda thinking that might be a more severe punishment for Musk than handing over a few billion in funny money.

                1. Charlie Clark Silver badge

                  Re: Pay up + interest

                  The HP case, dubious as it is, doesn't provide a precedent here. The argument was that, despite "due diligence" Autonomy hid relevant information from them. And it was HP that launched the case. Musk waived the right to due diligence, ie. was seemingly happy to buy sight unseen in which case it's caveat emptor. Elsewhere people have posted some good links to interesting articles about Musk's potential motives and how the lawyers are trying to get him off the hook.

            2. Anonymous Coward
              Anonymous Coward

              Re: Pay up + interest

              If Musk could just pay $1B and walk away, he would have done so already.

              The value is based on what Elon thought it was worth to him (while probably smoking something) to own Twitter.

              It's not as straightforward as you might be thinking.

      2. Eguro

        Re: Pay up + interest

        I thought part of the issue is that Musk can't just pay a billion dollars and walk away. Or am I wrong.

        As I understand it he has to pay a billion dollars if the deal doesn't go through, but the deal has to go through unless some very serious things go wrong - all of which would be stipulated in the contract.

        So he's kicking and screaming because it's the only way he knows how to try and create an illusion of something being wrong.

        Twitter can, and seemingly will, take him to court and have the courts decide if there is any reason for the contract and thus the deal not to go through. If there isn't any reason, then whether Musk wants it or not, he's on the hook for the $54.20/share.

        Remember Musk apparently waived any rights to due diligence via the contract, so some slight differences won't cut it.

    3. Howard Sway Silver badge

      Re: Twitter has been more than generous to him ... they've humored his games anyway

      No, Twitter have done what their lawyers have advised them to.

      In response, Musk has shot his big mouth off and posted childish shit on Twitter.

      Who do you think is going to win in court?

      1. Charlie Clark Silver badge

        Re: Twitter has been more than generous to him ... they've humored his games anyway

        Depends if it really goes to court. Musk has already done the damage and propbably has little to fear: a slap on the wrist and a fine. Meanwhile he gets to mine the incident for more cheap PR.

  3. PhilipN Silver badge

    Get in the popcorn

    Fact is the agreement with Twitter should indeed allow EM to walk away as and when anything untoward is found.

    If not then he will go after his lawyers.

    PS. "Chuck Norris" and "actor" do not belong in the same sentence.

  4. Flocke Kroes Silver badge

    Melania

    I have never played Elden Ring so I looked up Melania. Apparently she can be killed safely because her AI does not recognise a big canon aimed a little off centre is dangerous.

    1. Kane Silver badge

      Re: Melania

      "I have never played Elden Ring so I looked up Melania. Apparently she can be killed safely because her AI does not recognise a big canon aimed a little off centre is dangerous."

      That's a serious cheese strat, I'll have to keep that in mind for when I get to her. Although I wonder if it's still valid after the recent patch to 1.05

    2. Brewster's Angle Grinder Silver badge

      Re: Melania

      That's an easy kill?!

    3. J. Cook Silver badge

      Re: Melania

      ... I thought she was the boss that the "let me solo her" player is known for killing.

      But then, I don't own the game, I've only heard bits and pieces of it.

      1. Kane Silver badge
        Thumb Up

        Re: Melania

        "... I thought she was the boss that the "let me solo her" player is known for killing."

        Yup, they're an absolute legend.

  5. Winkypop Silver badge
    Devil

    Insanity

    All the way down

  6. Pascal Monett Silver badge
    Facepalm

    "vowing to see the deal through to a conclusion"

    So, Twitter didn't want it to happen, and Twitter wants to see the deal through.

    I tire of these stupid money games.

    In the end, this is a brilliant demonstration that it is not because you have money that you are better than anyone else.

    1. Plest Silver badge

      Re: "vowing to see the deal through to a conclusion"

      Sadly the opposite is usually true especially the more money is put on the table. The great and the good are corrupt to the core, not because they're bad people per-se but simply because too much of a good thing always makes people worse indivduals, enough is never enough. No problem with having plenty but there's a point when too much is too far, too much sugar, too much fat, too many drugs, you name it, usually ends badly for the people involved.

      1. Little Mouse Silver badge

        Re: "vowing to see the deal through to a conclusion"

        "but there's a point when too much is too far"

        I tried to eat too many Jaffa cakes once. It was great.

        1. stiine Silver badge
          Devil

          Re: "vowing to see the deal through to a conclusion"

          I envy you.

        2. Michael Wojcik Silver badge

          Re: "vowing to see the deal through to a conclusion"

          I don't understand the phrase "too many Jaffa cakes".

  7. R Soul Bronze badge

    The stupidest deal of the century... so far

    I hope these two zillionaire toddlers go to court - and both of them lose.

    Spending gazillions on the court case would be a bonus, except of course for all that dosh going to lawyers.

    1. TeeCee Gold badge

      Re: The stupidest deal of the century... so far

      We could always hope that the lawyers all go out to celebrate their extra wealth at an extraordinarily expensive restaurant, where the chef has just contracted a mutant strain of ebola...

      There. Everyone's happy now.

  8. J.G.Harston Silver badge

    "wrongful reasons"? That's very thought police. Have the CCP got a stake in Twatter?

  9. OhForF'
    Go

    I wonder if this has the potential to keep us entertained for as long as Darl McBride managed to do with SCO v IBM.

    Gotta stock up on popcorn

    1. Flocke Kroes Silver badge

      I am not expecting such a protracted sequence of delays. Once it was clear that The SCO Group had nothing, Darl focused on delays. Every year he delayed was a year he could convert Novell's license fees into income. (SCO was supposed to collect Novell's fees, pay 100% to Novell and get 5% commission back.) When it became blatantly obvious that continuing wiht the litigation would be trading while insolvent, Darl filed for bankruptcy. The result was not quite what he wanted: a trustee was assigned to spend Novell's license fees on the favoured law and accountancy firms.

      Twitter want their money now. Just the idea of Musk having to pay out so much money is a threat to Tesla's share value. Musk wants to cut his losses quickly. Neither side has an incentive to delay.

      The current battle is Musk vs reality. Musk needs Tesla stock at a high value while he settles his debts so he needs to convince the world that at worst he is only on the hook for a piddling $1B. He will be trolling like crazy to divert attention away from the $44B specific performance clause.

      1. Kanhef

        Depends on who the delays hurt more. If Twitter can use in-house lawyers, it doesn't really add to their costs no matter how long it goes on for. Either the company gets $1B in cash, or their stock gets bought out at (currently) 50% above market value; seems like a win for them no matter what. Musk has a lot more to lose if they decide to make the process painful.

        If he has to dump Tesla stock to make the deal go through, it will drive the price down; who wants to be holding when that happens? The lower the price of Tesla stock, the more he has to sell, which could lead to a rapid crash as investors try to get out before he has to sell.

        1. Anonymous Coward
          Anonymous Coward

          They aren't using in-house lawyers for the court battle, they've hired some heavy hitters that work the Chancery Court for just such things as this. Current prediction from most lawyers I've seen is "out-of-court settlement somewhere between a few billion and the full purchase price."

          Unless he's paying the full price, he won't own Twitter after this.

  10. Anonymous South African Coward Silver badge

    Chuckmate.

    Chucky want to know if it also include him/her/it...

    "Oh fuck, it's Chucky!" - Ready Player One.

  11. Anonymous Coward
    Anonymous Coward

    can only hope

    Well hopefully the Musky twat goes bankrupt.

    He deserves fucking jail for all the shit he does.

    1. Trotts36

      Re: can only hope

      You seem angry. Why are you angry ?

      Maybe you should not take it too seriously

      1. Anonymous Coward
        Anonymous Coward

        Re: can only hope

        Sadly some people are angry all of the time & all of the people are angry some of the time.

        Lacking any coherent reasoning whatsoever I presume the former so don't expect a meaningful answer.

      2. This post has been deleted by a moderator

  12. disgruntled yank

    Translation

    In the American vernacular of n * 10 years ago, this was called "letting your mouth write a check that your ass can't cash." Musk seems to do a lot of this, but this time he signed a contract that will lead to penalties for failure to cash.

  13. aks

    Is there a method behind Musk’s Twitter-deal weirdness?

    An interesting opinion from the Washington Post regarding this deal/not-a-deal.

    https://www.washingtonpost.com/opinions/2022/07/11/elon-musk-twitter-deal-falls-through/

    1. genghis_uk

      Re: Is there a method behind Musk’s Twitter-deal weirdness?

      Mike Masnik over at techdirt did an interesting analysis of Musk's Lawyers trying to get him out of the mess he's made

  14. YetAnotherXyzzy

    Yesterday: "I'm outraged that Musk wants to buy Twitter"

    Today: "I'm outraged that Musk doesn't want to buy Twitter"

    1. Swarthy Silver badge

      Both days: "I'm outraged that Musk keeps playing silly buggers with the stock market!"

  15. Trotts36

    Twitter in the s**ter

    This is joyful to watch.

    Regardless whether musk has to pay the severance fee the sheer destruction of share price is worth it.

    Banning Peterson was a bit of a game changer that I don’t think they’ll come back from…

    1. Anonymous Coward
      Anonymous Coward

      Re: Twitter in the s**ter

      Correct - they couldn't handle the truth so they banned it !

  16. Anonymous Coward
    Anonymous Coward

    Haha I just bought an apartment and I did more due dilligence than this clown did haha

  17. Howard Sway Silver badge

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