re: Twitter board unanimously recommends Musk's takeover bid...Has Elon Bit off too much?

Admittedly, I’m not going to scroll through the gazillion pages of that doc to confirm this. I went through some of the generalities and then went to Twitter’s R&W’s which is really the only thing that matters when it comes to the bot issue. I don’t see a specific waiver of diligence, but it’s not really something that matters. Diligence is what builds the R&Ws. Generally, the place diligence is waived is in the offer letter which isn’t a part of the contract filed with the SEC. As of now, I would presume the R&Ws were built out of some form of diligence because companies don’t put them in the blindly.

For example, most contracts have a R&W stating there is no pending litigation others than those matters listed on schedule 3.10. If there’s a lawsuit that was pending and wasn’t listed, the former corp owes either indemnity to the new corp or the new corp can use it to back out of the agreement if the contract allows. Usually there’s some sort of massive tail insurance policy or escrow account that covers any indemnity claims under the R&Ws.

As it stands now, it does look like there would have to be some sort of gross misrepresentation in the SEC-filed financials concerning bots for there to really be any actionable breach of a R&W. Their financials note that the bot number is estimated so that gives them some wiggle room, but it’s not without limitation. Where that line could be drawn, I don’t know. Is it 10%? 20%? Just depends. Now, that would go out the window if it was discovered they had actual knowledge of a higher number in discovery.

It’s worth mentioning that the R&Ws don’t appear to be completely built out yet. There’s still three reserved sections so maybe some of this is still being hashed out?

All in all, the R&Ws are a ton less than what I expected for a transaction this size so it wouldn’t be as shocking to me to find out he waived diligence. shite, I’ve handled $1m transactions that had twice as many R&Ws.

Long story short, I think you’re right based on what’s in that agreement that he’d be cooked if the company financials had estimated values on bots. It would take a pretty serious deviation from the estimates to breach the R&W and, even then, the material adverse event language on that end doesn’t seem to be friendly for him. Seems like he’s just using it as leverage to see if he can squeeze a lower price or, honestly, just to frick with them.