Kasturi lost interest by pretending to buy Twitter.
Bloomberg, July 9, 2022
I occasionally spotted a newsletter / commentary written by my Bloomberg colleague Matt Levine (see, e.g., this, this, this, or this). No one cuts through the complex world of securities law, M&A and SEC rules like Matt. Here is a quote from his recent post. You can Subscribe to this link.
I think it’s helpful to start with the big picture. Elon Musk is the richest man in the world and like many other rich people he has some unusual and expensive hobbies. One of his hobbies is that he sometimes likes to pretend that he will acquire public companies.1 She seems to find this fun, and why not? When he pretends to buy a public company, it creates a big drama centering on him. He bosses people in the neighborhood, bankers and lawyers, and hangs-on sources of funding and random2 Hoping to finish the deal, and then when he gets upset he can tell those guys to go home. “Haha you got it,” he could say, and they could all laugh well, or he could anyway.
This is an expensive hobby! When Musk pretended in 2018 that he was going to take Tesla Inc. private, he had to pay a 20 million fine to the U.S. Securities and Exchange Commission and stop being chairman of the Tesla board. You’re not supposed to go around pretending that you should buy a public company; The SEC occasionally considers securities fraud. But Musk is very rich and he could easily pay $ 20 million for his little trick. His appetite for pretending to buy public companies was, apparently, no less.
So this April, Musk announced he wanted to buy Twitter Inc. Why not? Musk seems to have a lot of fun using Twitter, and buying Twitter is a great way to pretend to buy On Twitter. At the time, I assumed that, like Tesla, he was doing something. “Usually,” I wrote, “if a billionaire chief executive officer of a public company offers to buy a company, his disadvantage Naughty Pretty low. When it’s Elon Musk, the historical differences are like 50/50. “
But he surprised me by quickly setting up a financing line (paying millions of dollars in fees to banks for a letter of commitment) and signing a merger agreement with Twitter. If he Was Pretending he’s going to buy Twitter, which ones to go? But he often goes to wide (and expensive) lengths for a joke – he sold 20,000 branded flamingos to make jokes about flamingos, and set up a boring company to make a joke (???) about tunnels – so who knows. Will he line up a billion-dollar financing and sign a mandatory consolidation agreement with a fixed-performance clause and a $ 1 billion breakup fee as a joke? I mean! No one else will! But maybe he is!
In any case, the market sank shortly after he signed the contract. Twitter’s stock closed at $ 44.48 on April 12, the day before Mask announced its offer; He agreed to pay 54.20 per share (420 A weed joke) Since then Twitter has certainly lost value: the stock closed at $ 36.81 on Friday, and other social-media stocks have declined significantly since April. (Snap Inc. has fallen about 57% since April 13; even Meta Platforms Inc. – Facebook – has fallen more than 20%.) Meanwhile, Musk’s main source of wealth is Tesla Inc. The stock is down about 27%. Announced his offer on Twitter. Twitter was worth less than what Musk agreed to pay for and Musk was less wealthy than when he agreed to buy it.. These are not Musk’s valid reasons for exiting the contract: The legally binding consolidation agreement signed with Musk Twitter does not allow him to terminate the contract due to changes in the stock market or his own assets. But because they can be masks I want Get out of the deal, even if he Was not Was joking when he first signed.
Yet, one should be open to that possibility Was He was joking when he first signed the contract. “Elon Musk had a well thought out business and financial plan for Twitter that worked on the economic situation in early April 2022, but the situation has changed and the model no longer works” does not hit me as the most logical description going here. “Elon Musk anxiously thought that owning Twitter could be fun, so he didn’t take it too seriously and signed an attachment agreement and then lost interest a week later,” he said. My first reaction to his Twitter purchase offer, that it was a joke, might be right. He was much more committed than I expected.
Elon Musk says he is canceling his $ 44 billion deal to acquire Twitter Inc. and accepting it personally, starting a legal battle with the company.
Twitter has made “misleading representations” about the number of spam bots on social networks and has “not complied with its contractual obligations” to provide information on how common bots are, according to a letter from Mask’s representatives on Friday as part of a regulatory filing.
Twitter says they will fight in court.
Here is the letter signed by Mike Ringler, lawyer for Scaden, Arps, Slate, Clouds and Flum LLP, Musk. It’s… ehhhhhh. Ehhhhhhhhhhh. Do we have to talk about this? Fine. Wrangler offers three excuses as to why Musk should be allowed out of the deal.
Go see the full column here.
1. It’s a * unusual * rich-person’s hobby, but by no means * unprecedented *. The famous Donald Trump spent some time in the 1980s pretending that he was going to buy public companies. But he did it as a way to make money – by pulling out greenmail from companies – while Mask seems to do it for the most part.
2. And, let’s face it, financial newsletter writers.