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

quote:

---

No buyer is REQUIRED BY LAW to be penalized for signing a purchase agreement when material fraud is identified prior to closing.

---

How is he going to prove his case?

Are you under the impression you can just say “fraud” and get out of a contract? Supposing he could access data are you aware how high the bar would be to prove fraud, especially considering the way the public disclosure was worded?

Lay out to me how you think musk would get out of the contract along the lines your suggesting.

Also, with regard to R&Ws and when there is no due dil/price adjustment mechanism, a sophisticated buyer asks for information relative to those R&Ws to confirm same before locking in. Musk specifically waived those rights/opportunities!

quote:

---

How do you know they did?

---

I don't. If the bots turn in at 20% vs 5%, I will.

Are we clear?

quote:

---

I don't. If the bots turn in at 20% vs 5%, I will.

---

How will you or musk find out prior to close?

You also, per your analysis can’t just show it’s greater than 5% but that it exceeds the wiggle room and show specific elements of fraud. You can’t just go “it’s obvious!”

So are we clear on the difference between what the contract provides, the law provides and what you feel?

[quote] Musk specifically waived those rights/opportunities! [/quote

Uhhmmm. No he didn’t

quote:

---

How will you ... find out prior to close?

---

How will I find out?

quote:

---

You also, per your analysis

---

Per my analysis?

quote:

---

So are we clear on the difference between what the contract provides, the law provides and what you feel?

---

Nah, but we are clear you've not bought a business.
To be clear, I have.

We are also clear the concepts of deliberate fraud and seller obligation confuse you. They shouldn't.

We are clear the stipulation of 20% bots vs 5% somehow passes your "smell test". Likely in the same way a Portland arsonist trying to burn the Fed Courthouse down, yet not arrested or tried, passes your smelltest. But a Granny who limped into the Capitol past waving, smiling security, does not.

You're a lawyer?

quote:

---

Nah, but we are clear you've not bought a business. To be clear, I have.

---

Lolololol. I’m sure I’ve worked on more asset acquisitions and merger agreements for amounts in a single transaction greater than the aggregate of all deals you’ve worked.

You didn’t know what the contract provided so you just pivoted to “fraud” with no basis. You’re trying to argue that substantively there is fraud and I’m arguing the contact and facts available.

For you this is political, for me it’s straight fwd contractual, legal analysis. Perhaps we’re speaking past each other.

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.

quote:

---

You didn’t know what the contract provided so you just pivoted to “fraud” with no basis.

---

Yikes!

My comments were/are made based upon Musk's (aka Musk and a team of high-end lawyers') matter-of-fact insistence that the bot issue must be resolved prior to closure.

His bot assertion is backed by fraud provisions in the law, and as delineated in the contract Decatur linked. Those are the provisions we are discussing.

Assuming TWTR defrauded the public, its advertisers, and its buyer(s), and that such fraud is identified, your impression the buyer has no preclosure remedy other than the out-clause penalty is bizarre.

quote:

---

You’re trying to argue that substantively there is fraud

---

Negative.
You've either not read my posts, or don't understand what you've read.

Nowhere am I arguing substantively, or otherwise, that there is fraud. However, it appears to be a probability. In the instance of a publicly held company, material fraud constitutes criminal conduct. If that is shown to be the case (as current Twitter traffic seems to indicate), the deal as it stands should be a nogo.

quote:

---

For you this is political

---

Odd premise.
The political side of me hopes the deal closes. The political side of me hopes the dishonest marxist bitches behind the scenes are shown the door, and free speech returns to the platform. So I actually hope TWTR was not fraudulently misrepresenting its traffic/user/account numbers to advertisers, the public and Musk.

quote:

---

Mostly this says to me that Twitter is being very carefully managed.

Unfortunately for them, it left them open to a guy

---

They banned Trump....thats when growth stopped...

quote:

---

They banned Trump....thats when growth stopped...

---

That's not true. Twitter stock has had ups and downs, but has been relatively stable. It spiked just during the 2020 election because everyone was involved and dropped when they purged everyone who disagrees with them including Trunp. But again, that demonstrates Twitter is being managed and they're not pushing for growth. Someone looking to reformulate Twitter for a profit is going to have a really easy time doing it because it has atrophied and needs a good tune up and that's just low hanging fruit.