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 imagine I’d referred to as it improper after the merger settlement went by. Possibly Elon Musk was severe for a change! Possibly he actually did need to personal an also-ran social community! Possibly Musk was actually wanting ahead to giving himself ulcers coping with content material moderation points! Folks have completed weirder shit for energy, and I believe we are able to all agree that Elon Musk is deeply taken with energy. Why else would he be busy testing how effectively People 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 vogue: with the agency that got here up with the poison tablet. That agency then filed a lawsuit towards 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 plenty of enjoyable placing it collectively, not least as a result of the screenshot of Musk’s poop tweet obtained included:

I really like a superb 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 once you perform some research on the corporate you’re buying earlier than you comply with an acquisition — his capability to stroll away from the deal is constrained. “That’s a tricky place for a purchaser to be in,” Redburn says.

The truth is, Delaware’s Chancery Courtroom, which is broadly 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 obtained out of a transaction — and it was due to fraud. In 2018, medical group Fresenius, greatest recognized for its US dialysis service, efficiently didn’t purchase drugmaker Akorn as a result of Akorn hid an entire 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 cope with Twitter is that there are too many spambots, and the corporate gained’t give him the info he wants to find out precisely what number of there are. Pathetic. Even when that’s true — and I’ve no motive to imagine it’s — Musk’s workforce nonetheless has to reveal that it issues in some materials approach to the enterprise.

“For those who 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, for example, non-public fairness agency Kohlberg & Firm tried to weasel its manner out of a $550 million settlement to purchase a cake ornament firm referred to as DecoPac. The presiding choose, Kathaleen McCormick, determined towards Kohlberg, which turned the proud(?) proprietor of DecoPac in Could 2021. McCormick is now the chancellor, which is what Delaware calls the fanciest choose in chancery courtroom.

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 may renegotiate the transaction at a decrease value, but when I had been Twitter’s board, I definitely wouldn’t try this as a result of then you definitely’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 solely 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 so as to get any form of comfort prize. So the subsequent enjoyable half shall be discovery. All it takes is one e-mail or textual content the place Musk admits he’s not severe concerning the deal to nuke his whole 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 automobile firms 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 go well with, and I’m not going to do a greater job. What I’m taken with, nevertheless, 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?

Every time I’ve requested this query, I’ve gotten some method of gibberish about fiduciary responsibility. Mainly the concept is that maximizing shareholder worth implies that Musk’s clearly unserious supply 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 plenty of issues and does a few quarter of them — possibly much less — and often behind schedule. In case you are 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 non-public, your normal commonsense fiduciary responsibility is to inform him to get misplaced. Wait and see if he’ll try this tender supply 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 recognized youngsters with what number of girls? This doesn’t precisely recommend a knack for dedication or, frankly, a lot of an consideration span.

Man, the extra I give it some thought, the angrier I get concerning the dumb little lectures about fiduciary responsibility. Anybody who’s adopted Musk is aware of about his try at beginning a media firm, not enthusiastic about tips on how to monetize, after which instantly shutting it down as a result of, I suppose, 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 completed?

Nicely, clearly they need to 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, certain, maximizing worth is essential for shareholders, however let’s take a look at how the dumbfuck nonsense Twitter’s board selected to do is figuring out:

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

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