Twitter goals its strongest weapon at Elon Musk: his personal tweets

So it was a troll in spite of everything.

Look, I used to be keen to consider I’d known as it improper after the merger settlement went by. Perhaps Elon Musk was critical for a change! Perhaps he actually did wish to personal an also-ran social community! Perhaps Musk was actually wanting ahead to giving himself ulcers coping with content material moderation points! Individuals have finished weirder shit for energy, and I feel we will all agree that Elon Musk is deeply concerned with energy. Why else would he be busy testing how effectively Individuals implement their legal guidelines?

A fast recap: Musk is making an attempt to do a runner on the Twitter acquisition, and Twitter isn’t having it. Twitter lawyered up within the rudest doable trend: with the agency that got here up with the poison tablet. That agency then filed a lawsuit in opposition to Musk to attempt to power the merger to undergo.

When the Twitter criticism dropped, my impression, on the primary learn, was that somebody actually had numerous enjoyable placing it collectively, not least as a result of the screenshot of Musk’s poop tweet acquired included:

I like lawsuit. Can Twitter win? “He signed a contract, it says what it says,” says Tom Redburn, the chair of securities litigation at Lowenstein Sandler, after he finishes laughing at my exasperation. As a result of Musk waived due diligence — that’s the factor whenever you perform a little research on the corporate you’re buying earlier than you conform to an acquisition — his capability to stroll away from the deal is constrained. “That’s a troublesome place for a purchaser to be in,” Redburn says.

The truth is, Delaware’s Chancery Court docket, which is extensively utilized by companies, tends to be pretty unsympathetic to purchaser’s regret, Redburn says. There’s one high-profile case the place a purchaser efficiently acquired out of a transaction — and it was due to fraud. In 2018, medical group Fresenius, greatest identified for its US dialysis service, efficiently didn’t purchase drugmaker Akorn as a result of Akorn hid a complete bunch of enterprise issues. “Fresenius was capable of show Akorn was making up its knowledge,” Redburn says. That would put one thing of a damper on a merger!

That is form of completely different from a half-baked assertion that Twitter’s accounting for inauthentic exercise is improper. Musk’s transparently bad-faith rationale for getting out of the take care of Twitter is that there are too many spambots, and the corporate received’t give him the information he wants to find out precisely what number of there are. Pathetic. Even when that’s true — and I’ve no motive to consider it’s — Musk’s staff nonetheless has to reveal that it issues in some materials strategy to the enterprise.

“If you happen to take the antics out of it, this isn’t an atypical form of lawsuit,” Redburn says. “We’ve seen a good quantity of this over the previous few years.” Throughout the pandemic, as an illustration, personal fairness agency Kohlberg & Firm tried to weasel its manner out of a $550 million settlement to purchase a cake ornament firm known as DecoPac. The presiding decide, Kathaleen McCormick, determined in opposition to Kohlberg, which grew to become the proud(?) proprietor of DecoPac in Could 2021. McCormick is now the chancellor, which is what Delaware calls the fanciest decide in chancery court docket.

Now, I don’t know that the Twitter case is essentially going to go to trial. It appears doable Twitter is keen to settle, maybe by demanding the next payout than the $1 billion specified within the contract from Musk if the transaction didn’t undergo. I suppose Twitter might renegotiate the transaction at a decrease price, but when I had been Twitter’s board, I actually wouldn’t try this as a result of then you’re nonetheless in an settlement with Elon Musk, and that shit is for suckers. Although I suppose there’s empirical proof at this level that the board composition is completely suckers.

However the mechanism for these outcomes is the lawsuit Twitter filed — it has to stay dedicated to the little bit of being bought by Musk with a view to get any form of comfort prize. So the subsequent enjoyable half will probably be discovery. All it takes is one e mail or textual content the place Musk admits he’s not critical in regards to the deal to nuke his total place. And due to Musk’s lack of impulse management, it strikes me as doable that somebody goaded him into saying so.

So what are Musk’s probabilities? Famous quick sellers Hindenburg Analysis — you might keep in mind them as those alleging fraud at electrical automotive corporations Nikola and Lordstown Motors, leading to SEC investigations — have gone lengthy on Twitter, successfully shorting Musk. Plus, Bloomberg’s Matt Levine, an precise lawyer, has combed by the specifics of the swimsuit, and I’m not going to do a greater job. What I’m concerned with, nonetheless, is a really annoying dialog I’ve had with individuals over the past a number of weeks: what dumbfuck nonsense made Twitter’s board take Musk severely within the first place?

At any time when I’ve requested this query, I’ve gotten some method of gibberish about fiduciary obligation. Principally the concept is that maximizing shareholder worth signifies that Musk’s clearly unserious provide have to be taken severely as a result of, gee whiz, it could be some huge cash for shareholders if it had been actual.

However that’s precisely what I imply!!!!!! Elon Musk famously says he’ll do numerous issues and does a couple of quarter of them — perhaps much less — and often behind schedule. If you’re being wooed for a buyout by somebody with a historical past of poor impulse management, violating agreements and launch licenses, ignoring regulators (keep in mind “I don’t respect the SEC”?), and bluffing that he’ll take his firm personal, your normal commonsense fiduciary obligation is to inform him to get misplaced. Wait and see if he’ll try this tender provide he was threatening or if he’ll lose curiosity as a result of one thing else new and glossy comes alongside. I imply, this man sired 10 identified children with what number of ladies? This doesn’t precisely counsel a knack for dedication or, frankly, a lot of an consideration span.

Man, the extra I give it some thought, the angrier I get in regards to the dumb little lectures about fiduciary obligation. Anybody who’s adopted Musk is aware of about his try at beginning a media firm, not desirous about how you can monetize, after which instantly shutting it down as a result of, I assume, it bored him? I’m referring to the short-lived Thud, which was form of like MSCHF however and not using a enterprise mannequin. Musk got here up with it as a result of he didn’t purchase The Onion when it was on the market; Thud folded earlier than it ever had an opportunity to do something thrilling.

So what’s the actual factor Twitter’s board ought to have finished?

Effectively, clearly they should seek the advice of with their monetary and authorized advisors. The board most likely ought to have heard Musk out. However one factor that board can then do is say “no ❤️” and go about its enterprise!

Like sure, positive, maximizing worth is essential for shareholders, however let’s take a look at how the dumbfuck nonsense Twitter’s board selected to do is understanding:

• Firings of key personnel
• Impolite tweets by Musk about Twitter staff, prompting harassment from his flying monkeys
• Stopping long-term product improvement
• Distracting staff and making the corporate a extra disagreeable place to work
• Costly litigation

This isn’t what I might name maximizing shareholder worth; it’s working the enterprise into the bottom, screwing the shareholders within the course of. Have you learnt what most likely would have really maximized shareholder worth and likewise been very satisfying? Telling Elon Musk to fuck off.