Twitter sues Musk: He can't just 'change his mind, trash the company, walk away' After threatening to do so, Twitter on Tuesday actually sued Elon Musk, claiming the billionaire is breaking the terms of his agreement to buy the biz by trying to flee from the deal. The drama began in April when it emerged the Tesla mogul had bought a 9.2 percent stake in the website, turned down an opportunity to join its …
This is likely to languish in the courts for years, but at this point there is little incentive for either party to back down. Musk's people will try to play chicken with Twitter on the fake account problem, knowing that if that proves true in court the company is toast, and even if it isn't bad enough to break the contract, the information coming to light about the companies internal working might tank it. If the case does proceed and Musk can't get the severance clause nulled, he still can fight on the valuation, and Twitter will want to fight for the full amount. So I doubt if this isn't settled before court that it will without going to appeals and counter appeals (years).
In the mean time, anyone at Twitter has to wonder what their prospects are, as being loyal to the current management means having your head publicly on the block if Musk wins. The current management will purge those the suspect have split loyalties, and key employees are asking themselves if it's even worth the roller coaster, as the company may be doomed to hit the rocks either way.
That will compound turnover, complicate the search for leadership, and complicate operations at every level. Any further missteps will compound those losses.
On Musk's side, he will be taking heat from all sides. Conservatives just realized he wasn't in fact part of a secret "free speech" cabal to protect nationalists right to shitpost. Investors got burned on both sides when the deal fell through, and some will look to punish Musk's other ventures. He also further damaged his brand and business reputation, which may impact his current and future members. This suit will likely drag on and on for years. So this is what "Howard Hughes" Elon will look like. Sadly it's all downhill from here.
Deeply wounded from these events, it is now vulnerable to takeover bids from even less savory actors. This may have real impacts on the people who have given so much of their lives to the platform. While Facebook and Google probably couldn't dodge regulators long enough to pull off an acquisition, I'd watch out for other ghouls popping up. China or Saudi interest might also have a tough time, but other national or multinational interests might succeed. Either way the new owner will need to monetize everything to recoup the purchase price. So I don't see Twitter as we know it surviving barring the snowballs chance in hell that it gets acquired by it's users and turned into a giant Co-Op.
I think Twitter would ask for and receive an expeditious trial from the court. This goes to a state court in Delaware, not a federal court, and they know how to move things through pretty quickly and will defer to what corporations want as far as how quickly it moves - there is a reason why so many US corporations are registered in Delaware regardless of where their HQ is.
Twitter will receive an expedited hearing because they will be able to argue that uncertainty resulting having the process take years would have a severe negative impact on their business, from being able to explore other potential offers if Musk doesn't complete the purchase or hiring/retaining talent who may not want to work for a company that may or may not get bought out, may or may not remain publicly listed, etc.
The delaware court is a purpose-built commercial law factory. The judges and lawyers specialize in contract law, etc. so that they can resolve these disputes within the time line of the agreement.
That's one of the reasons they are the jurisdiction of incorporation for large numbers of businesses.
At most only two acts.
Musk has bugger all on his side and Twitter have among other things - Musk's self damning Tweets. Delaware Chancery court will wrap this up in about a year. Musk will appeal. In the very unlikely event that is granted, Musk only gets that one do-over - and that will be after a year of Musk posting more evidence against himself on Twitter. A normal person in a hole this deep would have stopped digging already. Musk founded The Boring Company.
The third act will likely be Musk suing the banks he was debt financing the deal with, trying to force them to honor agreements that have since lapsed by Musk's own antics, and losing just as badly as he will against Twitter. And I expect you're right. Musk will lose, appeal, lose again, and then the next court up will refuse to hear his next appeal.
The fourth act will be the SEC having a word with Musk about securities fraud. A lesson he apparently needs a refresher course on after his "funding secured" Tweet landed him in the SEC's crosshairs. Reading the complaint Twitter filed, there appears to be several additional instances of Musk saying or doing something that could be considered market manipulation. Given the SEC already warned him about this sort of thing and let him off with a pretty light warning by making him step down as chair of the Tesla board and have a minder for his tweets, they likely will go for the maximum penalty under the law the next time.
If you read the actual complaint Twitter filed, Musk is one hell of a bad negotiator and wouldn't accept "yes" for an answer. He started off with terms very favorable to Twitter and then kept getting talked into even better terms for Twitter, all so he could have his shiny new toy Right Now(tm). Then it dawned on him what he had agreed to, in writing, and started trying desperately to get out of the deal. I wouldn't be surprised if Twitter wins on summary judgement.
"The third act will likely be Musk suing the banks he was debt financing the deal with"
I've got a sneaking suspicion that the banks have very airtight contracts that are all in their favor. It's why the really big banks have lots of money (lawyers, not souls).
Will probably form most of the trial evidence for Twitter. I saw an article about the claims in their lawsuit and they reference his tweets multiple times, he's hoisting himself by his own petard every time he logs into Twitter.
Guy thinks he can say whatever he wants without consequences. I hope he's forced to make a choice: either buy Twitter for the $44 billion agreed upon price, or pay Twitter the difference between his offer price and the current share price.
He's kind of the textbook definition of "smug" and "smarmy". Seeing him get his comeuppance would be sweet to behold!
What I'm hoping for:
1) The courts force Must to complete the agreed purchase
2)The reputational damage that Musk inflicted on Twitter drives the company under
3)Twitter going over the edge drags Musk down with it, forcing him to sell off Tesla and SpaceX to more responsible parties
4) Twitter and Musk drag each other down to obscurity and their only lasting impact being examples of "What not to do" for future entities.
Don't forget the Twitter shareholder lawsuits against Musk. I'm a Twitter shareholder and would be happy to join a suit about my loss of shareholder value. This whole fiasco may or may not tank Twitter but it could be much, much worse for Musk (and by extension his other companies).
It's the news org's policy and business plan that dictates if they hire real news reporters, or twitter screen scrapers. And I hate screen captures masquerading as news stories.
The huge irony is that this case will feature Elon's twitter feed as court evidence. Delightful.
I don't think they had a choice in accepting Musk as the new owner. Musk already had 15% of twitter stock when he got started on this, making him the biggest shareholder at that time.
If they tried to block it (as they tried initially) the board would probably been roasted (on twitter itself) by Musk and his fans.
Musk did mention about starting his own competing social media site if he didn't buy twitter. And a substantial number of his followers in twitter would have joined it probably.
Twitter may not be able to survive an overnight competitor with 100 million users.
Anyway, I don't think that Twitter is all that great. But in this case, I think twitter did not have a choice. Now they are in a position where they can't drop it without suing Musk and hope that in the process there is no dirty laundry being aired in public - especially the bot percentage.
If they didn't sue Musk now, the board would probably be sued by the existing shareholders for not following thru and getting a chunk of money / giving shareholders an exit at a price which is substantially higher then the current stock price.
It will be interesting to watch how this develops.
"What could be better?"
Adding Trump into the mix :-)
I hear Trump has bad mouthed Musk over this and Musk had a public fit over it. Bearing in mind one of Musks aims on buying Twitter was to re-instate Trumps account (and likely donate to Trumps political aspirations).
already happening.
Many people who were going to buy Teslas are either looking elsewhere or deciding to wait an extra year or two to see what else becomes available. At the other extreme, Teslas cannot be modified to roll coal.
With any luck, Musk's demand to buy Twitter at $54.20 will cost him his Tesla shares and Tesla will be better off without him.
At the other extreme, Teslas cannot be modified to roll coal.
Heh. Yes, You Can. (that was an LS swap into a re-built Model S.)
He's also working on cramming a diesel into a Model 3
Maybe without him, Tesla cars might have better build quality and post- sales support? Just sayin.
"Many people who were going to buy Teslas are either looking elsewhere or deciding to wait an extra year or two"
At least in the US that's not a bad idea. There isn't much of a choice for EV's that aren't luxury priced and stuffed full of useless gadgets that are doomed to stop working the day after the warranty expires.
Teslas, or as I call them "Smug-Mobiles", are nothing special. Many car companies you can trust are fast catching up which will quickly make electric cars a reality for far more of us who want one but can't afford to pay Musk for his over-priced products.
Really? A fan? The man is a child trapped in a man's body. If he wants to be taken seriously by other adults, then he needs to grow up a lot more and stop acting like a spoilt, silly rich 17 year brat who's just got his family inheritence.
He's not a visionary, he's barely an entrepreneur, he's a media parasite simply acting up to get a attention whenever people stop watching him, my kids stopped doing all that when they got to about 10 years old.
Sorry but I find him utterly distasteful and indicative of the sort of vacuous "great and good" idols that Gen-Z types worship.
Yeah but rockets though.
If Elon is all that - and I do not disagree - what does it say about the rest of our civilization, that we need him to push the status quo? What exactly have the rest of us been doing since Apollo ended?
And if you say - "well, but rockets don't improve conditions for the poor on earth, how can we worry about colonizing other planets when children are starving in Africa", or the like - then I'll honestly say, if I can either have Elon and a manned Mars program, or no Elon and the entirety of the rest of the world's space launch efforts put together - I'll take Elon, horrendous flaws and all, and consider it a good trade. Even at cost of less good on Earth, Humanity is better off for such dreams, and since 1973, the rest of us seem to lack them.
> we need him to push the status quo
Push the status quo?
What dream are you in? He didnt push it, he steals it and claims it as his own.
Hyperloop, stolen. An ancient, already attempted idea in the public domain. Ignored by anyone with sense, stolen by a man who can make idiots believe he thought it up.
Tesla, stolen (if you talk to the original creator).
Fired by Paypal for incompetence.
Unable to get a rocket up into orbit before it blows up because they tried to re-invent the wheel and didnt think about asking NASA if they already knew how to do something, then tells everyone in SpaceX that SpaceX will be gone very soon if they cant have a launch every 2 weeks.
Tesla claims to have autopilot, which is nothing of the sort, more like auto-kill mode. Google have self driving cars, Tesla dont yet claim they do with Musk saying it loudest.
The man even thought that he could replace a plane with a rocket, like its the 1950's or something. Totally ignoring the fact that the plane would beat the rocket in price, economics, efficiency and pollution. All he had was "fast fast fast" as a selling point.
Then he makes a boring boring company (seriously who the hell signed off that name), claiming that he can dig tunnels cheaper than anyone else, which ends up to be a lie as his tunnels COST THE SAME when you scale them up. The only way he can make them cheaper is to make unsafe tunnels with no infrastructure, like stations, escape routes, ventilation. Funny that, if you build less of the stuff needed in a tunnel it ends up cheaper. Not to mention that he then claims he invented the idea of a subway in the first place.
Oh, and the Tesla battery, not made by Tesla, is revolutionary! Musk pushed the boundaries and made batteries store more charge!! How, how did he manage this miracle?
Tesla made the battery cells bigger... Funny that, bigger cells store more charge. Ooh Musk must be a genius.
The only improvement he can claim to own is the redesign of the battery cell contacts allowing more efficient current drain. And that aint rocket science to be honest! (pun intended)
The man also publicly insults experts as they try to save the lives of children, simply because his ego got bruised as the experts poo poohed his tacky idea on how to help. and he used his monetary clout to get away with it too.
The man is an arsehole, a faker, a manipulator. He wastes money, wastes time and loves it. To think what could actually have been achieved had the money he swindles from people and governments and companies that should know better went to proper real causes and investments.
I hope this is the beginning of the end of this fool.
Oh and where are the Tesla trucks? They were promised years ago. And where is the Mars colony? We should be up there by now according to his dealines. Did they solve the problem of how they would actually survive there yet? Maybe that is the hold up, reality came knocking.
I'm gonna highlight the part you said about rockets cause I don't care about the rest:
> Unable to get a rocket up into orbit before it blows up because they tried to re-invent the wheel and didnt think about asking NASA if they already knew how to do something, then tells everyone in SpaceX that SpaceX will be gone very soon if they cant have a launch every 2 weeks.
Consider then the fact that everybody else is still doing worse. SpaceX is not so much a shining, crowning achievement for Elon as a damning indictment of the incompetence and apathy of the rest of the human species.
We could have been on Mars in the 80s.
"We could have been on Mars in the 80s."
There is still a whole bunch of engineering to be done before it's possible to send humans to Mars. It's not really a good use of money as robotics keep getting better and sending ten rovers might be far cheaper than sending 2 people. Heck, we don't even know how the body reacts to fractional G. After 9 months of being weightless, would humans be able to function on Mars right at the time when they might need to do the most work to be able to survive until they can come back, if they can come back.
A research base on the moon is a better first step. There are even some good commercial possibilities for a moon colony where there doesn't seem to be anything on Mars that benefits Earth.
I have a feeling that Mars won't be someplace humans can visit until there is nuclear propulsion and trip times can be substantially shortened.
We could have had nuclear propulsion in the 80s, yes.
And that's sort of my point. If Elon is the only person with money who thinks it's worth trying - then by all means, bring on the Twitter drama. That's a good trade for me.
Also I think you're exactly the wrong way around on commercial benefits of Mars vs Moon. Mars has an atmosphere to make fuel from, Mars is somewhat protected from meteors, Mars can be terraformed. And if the goal is colonial self-sufficiency, Mars is more practical than the Moon. The only advantage of the Moon is that it's faster to reach from Earth - but still not fast enough for an emergency rescue.
Agreed that Elon is an ass often, especially nowadays(he seemed better when he wasn't as rich or successful. As one of the richest, if not the richest person, alot of restraints are removed from him). And yes, he acts like a stupid rich kid, who wants to get whatever he wants.
Guess what that lead him to doing earlier on?
Russia said no (I understand he was laughed at actually) when he wanted to buy some rocket launch services.
That spoilt brat attitude got him started with SpaceX.
We probably need more of this Elon style spoilt brats, as long as they don't try to destroy something which is essential.
Twitter is hardly essential. Unless you are an influencer or want to spread propaganda. So if Elon destroys twitter in the process, it may even be considered as a plus in the long run.
"So if Elon destroys twitter in the process, it may even be considered as a plus in the long run."
He is more than welcome to destroy it after he makes the purchase and takes it private. In the mean time, it's messing with other people's investments, hopes and effort. I'm not a Twitter fan and I'll tell people I know that I consider it a waste of time, but I don't have the same stage and I'm not going to make anybody in the wider world lose money on their investments. I expect that if Elon does wind up having to buy Twitter and gets banks and other investors in on it, he won't be free to tear it down as he likes without serious repercussions. He needs those banks and investors around to keep propping up his other ventures.
"He didnt form any of them."
SpaceX and Boring company are his from startup but neither one is new or particularly novel. The Boring Company is rather expensive and slow when it comes to tunneling the same way that the Tesla Powerwall is much more expensive and limited than battery systems from other major makers.
I started off kind of liking the guy because he was different, fresh, and seemed to have some genuine entrepreneurial spark.
Now I think he's a jumped up adolescent teenager with the morals of an alley cat and any spark he once had has faded away to be no more than a glimmer.
The same can be said of many of his ilk, sadly.
I think it is a negotiation tactic, similar to when Trump walked away from N. Korea's "dear leader" at one point. Later it got settled with a reasonable agreement.
/me plays Kenny Rogers song.... "Gotta know when to hold 'em, know when to fold 'em, know when to walk away, know when to run..." (etc.) I do not think that the merger/acquisition jungle is much different than a poker table.
So let's see if I am right - I think THIS will happen:
* Twitter admits to the bot/spam activity that is REALLY happening
* Elon re-negotiates the price to something lower than $44B
* it all goes through and shareholders are happy
* Twitter becomes a free-er place for self expression with fewer bots, trolls, and spamming
"* Elon re-negotiates the price to something lower than $44B"
That was his best and final offer. Twitter wasn't interested in selling but they found that shareholders were willing to part with their stock for the premium being offered. Lowering the price after having to deal with all of the abuse and turmoil isn't something they want to do. There was no "negotiation" to start with so why is any acceptable now? What if people actually believed that the deal was going to go through and the stock went up to $52/share, could Twitter insist on more money? Doubtful.
In the beginning Twitter was against the idea of Musk buying them out , and now they are angry that he won't.
For a company that believes in socialism and liberalism etc why have they suddenly become Capitalist and Conservatist, is it the call of the giant GreenBack that is changing their minds?
They really are a very strange company...
They can probably take it or leave it. They're angry that (a) he's slinging mud about their company, and (b) he's not giving them the billion dollars pulling-out fee. And realistically he could probably have got away with (b) if it wasn't for (a). Money is business, but slagging them off makes it personal.
I think Musk came in with an offer so high ($54.20 per share) that it force the board to accept it on behalf of the shareholders. If they hadn't then they would have been looking for new jobs very quickly, and another board would have.
The share price today is about $34, so the board now has a mandate to do the best for the shareholders and that is to force the sale through.
From what I've read Musk had the opportunity to do all the due diligence on Twitter and didn't, then still signed the contract to buy it. Since then the stock has gone down even further.
"From what I've read Musk had the opportunity to do all the due diligence on Twitter and didn't, then still signed the contract to buy it. Since then the stock has gone down even further."
I expect that what the court case will be based on along with the insults from Musk in violation of the contract. A check for a billion dollars less attorney fees is another $100 in the checking account. That's nothing to sneeze at. If you have a small car, that might be a whole tank of petrol.
I think comment They really are a very strange company... would be truer if they were happy.
End of the day the board accepted an offer in good faith and agreed a contract for the purchase of the company in the interest of Shareholders (which will of course include them through share schemes and options) which they are required to do.
Elon comes along makes an offer which is refused and comes back with a better offer, which is accepted.
He waives the right of due diligence as part of the agreement.
He then makes all kinds of comments through social media which has a negative impact on the 'real' share price.
He then comes up with a spurious objection of spam bots being rife.
Twitter explain how they come by their figures on the number of bots, although they technically didn't need to due to waiving of due diligence by Elon
Elon uses the Trump clause - ' I don't believe them, it's fake figures' - to get out of the agreement
Twitter call his bluff and sue for the contract to be enforced
I think at the very least Musk should be made to pay the $1 billion as agreed in the contract, plus the difference in share price between his offer and the price at the time of a legal decision being made due to his blatant attempt to manipulate the market share price.
The SEC should then launch a full investigation into his actions and comments from the view of attempts to illegally influence the value of a company.
> and now they are angry that he won't
Because he entered a contract that says he MUST.
Do you understand the implications of being COMMITTED to buy something? Ebay, bloody Ebay makes you do the same when you win the auction. You are committed to buy as you have entered a contract.
The idiot recently tried to use an analogy of buying a house to explain it. That if he found the house was full of termites yet was told it wasnt, that would allow him to cancel the purchase? Well fat lot he knows! Everyone knows that when you buy a house you, YOU get the surveys done. This is a standard part of buying a house, the solicitor actually sorts it all out for you. Thus you would know there were termites. But once you exchange contracts YOU ARE COMMITTED TO BUY. Musk and Twitter exchanged contracts. Contracts that also commit Musk to certain obligations that he is also breaking openly.
Thus Twitter are taking him to court for breach of contract.
This is nothing strange. The fact Musk thinks he can get away with it is, but what do we expect from an idiot who says he is an engineer yet he doesn't know a thing about engineering?
"but what do we expect from an idiot who says he is an engineer yet he doesn't know a thing about engineering?"
But he has a Bachelors of ARTS in physics. Yes, "arts". I'm thinking that has to do with the accrediting standards and what they require of a uni's course requirements for a "Science" degree. He does have a BS in Economics. Again, strange category for that degree. Nobody has posted his transcripts but he did register for a graduate degree that lasted about a day.
Don't forget that he also invested massively in crypto over the past year, so with the huge gains that all his magic internet money must be making he'll easily be able to afford the settleme.......... oh dear, looks like he's also lost most of that money too................... and even some of his idiot fan club might not fall for his pump and dump scams any more when they see what an enormous balls-up he's made of his Twitter takeover.
The only Musk fans who will wind up destitute because it comes to pass that their idol fucked around and found out are the ones who followed him into crypto. And every single one of those asshats deserves destitution, because their get rich quick scheme relied on making someone else destitute.
nah, his fans are just as much to blame for his shittyness.
They deserve a share of being fucked over.
They supported every last fucking stupid fucking thing he does, and make excuses for the twat.
They keep telsa overpriced by 500 times it's worth, enabling his shittery.
So fuck em, they don't add anything to the world but wanking over idols.
"I utterly dislike Musk myself but I think his fans do need to find themselves a new idol,"
I could provide a list. Most of the people on that list would have a Nobel prize in science or died before their work was properly recognized. Lise Meitner would be one of them. I might also suggest Jason Priestly. Unfortunately neither of them are exactly household names.
Well, since I don't use either Twitter or have a Tesla, this is like watching two strangers have a bar fight. Entertaining in a voyeuristic way, but not my problem.
Lawyers will have a field day, though. Even if Musk has to pay for Twitter out of his own pocket, he won't be banging a drum on the street corner for pennies, and Twits will twitter whoever owns it, so popcorn time!
When this all started, Twitter removed their shadow bans they had in place. There are actually a lot of people with large followings who are returning to Twitter because it is actually working again.
Obviously TBD to see if enough users return, and very TBD to see if Twitter remains out of the shadow ban business.
I thought that the situation had got to an impasse because the Twitter was unable or unwilling to disclose how many users were bots. This has a significant effect on the company's valuation -- since Twitter depends on advertising, pushing to eyeballs an actual user count is necessary to get an accurate valuation.
If Twitter can't establish a user base figure their entire business model becomes smoke and mirrors. But them, based on what's come out about Uber recently this appears to be the nature of modern business -- we seem to be in a world where Web3 isn't a peculiar perversion of business, it is how business works. After all, the entire Web2 ecosystem is built on advertising revenue that's tied to a particular user model -- if that turns out to be fallacious then the entire Web ecosystem could come crashing down (it only exists because people believe in it -- if we stop believing....).
Did you actually read the article? Musk CLAIMS that this is the problem. Everybody else and their dog claims that A) he is just looking for an excuse to get out of the deal and B) it doesn't matter because he agreed to a quick sale with a lower standard of due dilligence.
"After all, the entire Web2 ecosystem is built on advertising revenue that's tied to a particular user model -- if that turns out to be fallacious then the entire Web ecosystem could come crashing down (it only exists because people believe in it -- if we stop believing....)"
There's a whole lot more about the advertising lark that depends on people - to be specific, the advertisers who buy advertising services - believing in it. Remember, the advertising industry only sells one thing: advertising.
If they had a reliable "bot test" then they would ban them all, no?
My guess is that 5% is a guess.
M&A law is not new to regretful buyers who found a mistake or exaggeration, and think it could be a handy pretext to pull out of the deal. It is going to be very difficult for Elon to win on that argument.
Side note. The dude actually started out by claiming he could FIX THE BOT PROBLEM! Now saying it has a bot problem so he must withdraw! He is a clown.
"not taking anyone's side here. but why is it so hard for twitter to give the numbers ? you'd think that a company that is monetizing data mining (that's what all social media platforms do ) would know exactly what is going on so they can optimize revenue."
The numbers are very hard to pin down and are subject to a lot of estimating. Not every bot is going to be uniformly a really bad thing or a really good thing so how do you say that because there are bots, they are bad and diminish the value?
With such limitations on the size of a tweet, many people look like bots. Many people are no different than bots for that matter. Again, how can they measure exactly? If they had phone numbers for each account, bot operators could just get Google Voice numbers and have them forward to a call center with low paid people that do nothing but field such calls all day long. Move, counter-move. Great job for somebody with physical limitations to do from home.
Musk was very astute in offering to buy Twitter, it allowed him to liquidate stock without affecting the value of his own company adversely.
Was he ever serious about buying it? Probably not. Has he made a profit from it, most likely yes. Has he exposed Twitter as being overvalued for what it does? Definitely!
John
I am not and never have been a fan of billionaires. Of all the high profile ones, Musk would appear to be doing something useful. Tesla may not be the best EV but at least it has forced the major car manufacturesrs worldwide to up their game.
Again, Space-X has achieved more per billion than any state run organisation. If it results in state organisations pulling the plug on waste and political grandstanding and just dealing with the problems of space travel and satellite launches then it has done something useful.
Now to the ''social media'' billionaires. - Is there anything they have done except turn society against itself and turn the internet into a toxic sewer of influencers, advertisers, bullshitters ( but I repeat myself..)
In the early years I signed up to FB and used it to catch up with people all over the world. In the last few years I have used it less and less because there is nothing on it apart from adverts, trending shit of no relevance and more fucking ads. Twitter , tik tok, snapchat and the rest of the pointless SM crap I have avoided as I doubt there is anything there other than ads and self promoting idiots..
If we are to have a cull of tech billionaires then this is where we should start, not slagging off someone who has actually managed to produce something other than hot air and hate.
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