Elon Musk Wants to Terminate $44 Billion Twitter Acquisition [Updated]

[TightLines]

Musk should have carried out his own investigation into Twitter to clarifiy all the numbers and figures that Twitter was giving him but as he didn't, Twitter's board are now appearing to say 'tough luck Elon, if you had any concerns you should have checked rather than accept our word, the fact you didn't is not our problem and thus the deal you agreed to still stands'.

Twitter are by no means 'clean' here because they are refusing to give Musk the information he requires and thus holding him to the deal he agreed to.

What makes you think he hasn’t and thats what uncovered the discrepancies? Any potential suitor to purchase Twitter would also rely heavily on the CPA firm that does the auditing for this public company… and the accounting is only as good as the info being provided by Twitter… if they find the info isn’t trustworthy then they indicate such in the public filings… but the accounting of its books is on Twitter. The CPA firms are just there to review info and certify it was obtained by using GAAP. If Musk found material breaches in the info he was provided, then how is that his fault?

 

[joecomo]

not using Twitter a lot - but in my humble opinion it is mostly bots and fake accounts (if the 5% where for the real users, I'd buy that)

 

[cocky jeremy]

Damn. Too bad. I was hoping he'd buy it and shut it down.

 

[Sir_Macs_A_Lot]

That's wonderful. He was the only person on the planet (other than Twitter chairman Bret Taylor) who thought this was a good idea.

 

[macsimcon]

What makes you think he hasn’t and thats what uncovered the discrepancies? Any potential suitor to purchase Twitter would also rely heavily on the CPA firm that does the auditing for this public company… and the accounting is only as good as the info being provided by Twitter… if they find the info isn’t trustworthy then they indicate such in the public filings… but the accounting of its books is on Twitter. The CPA firms are just there to review info and certify it was obtained by using GAAP. If Musk found material breaches in the info he was provided, then how is that his fault?

That's incorrect. Musk agreed to the purchase prior to any due diligence. That was amateurish. It was stupid. And now he's going to be forced, as he agreed, to buy Twitter...a company which is practically worthless.

 

[planteater]

Damn. Too bad. I was hoping he'd buy it and shut it down.

He will still be buying it, but at a reduced price. He has Twitter by the balls. They can’t go to court and they can’t sell it at the original offer price.

 

[0092762]

He will still be buying it, but at a reduced price. He has Twitter by the balls. They can’t go to court and they can’t sell it at the original offer price.

You seem so confident you know better than the attorneys in this case.

 

[xbjllb]

I'm sure tweeting him about 60% of conservative Twitter accounts being Soviet bots the day after he announced had nothing at all to do with it. And about 5-8 times after...

 

[planteater]

You seem so confident you know better than the attorneys in this case.

He has the upper hand. Do you really think Twitter wants to go to court and defend their bot numbers?

 

[wigby]

His accusations - sent to the SEC, not the internet - are strong enough to potentially bring about a shareholder revolt and investigation.

Counting banned spam accounts as MAUs is definitely done with intent to deceive.

You mean that same SEC that Elon defies and publicly attacks? I'm sure they got Elon's back here This was an airtight contract that Elon broke. It must be enforced otherwise what is the point of any contracts or courts or any deals?

 

[Carnegie]

People sitting here defending Twitter are a bit delusional - and it's all centered on their hatred for Elon (people tend to hate ultra-successful people, which is why most people actually aren't successful).

If anyone uses Twitter, you know the bots are a ridiculous problem. It's not even close to 5%, I wouldn't be surprised if it was closer to 50% than it is 5%. (Twitter official filings are 5%).

Twitter going to court would be one of the worst things to happen for it's value. They would *literally* have to admit they lied in their SEC filings, which means they lied to ALL their investors.

Anyone saying anything different has no understanding of the reality of Twitter.

Elon stands to lose virtually nothing if this goes to court outside of $. He stands to win all the PR in the world if Twitter proves to be FOS.

I suppose different people have different experiences with Twitter. What people see depends in part on what they've sought out or looked at in the past. So, depending in part on their own interests and viewing habits, different people might see much different degrees of bot infestation.

That said, Twitter doesn't claim 5% of Twitter is bots. It estimates that fewer than 5% of what it counts as mDAUs is false or spam accounts. That's quite a different thing. For most bots, it might be easy for Twitter to determine that they are bots, thus most of them aren't included in the mDAU counts. What's left - the bot accounts which aren't as obviously bots - might be less 5% of the mDAU counts. And Twitter acknowledges that the actual portion of mDAUs which are spam or false could be higher than the estimate because it's difficult to know for sure.

 

[Carnegie]

Musk is in trouble over Twitter because if i remember rightly, when he decided to purchase Twitter he was asked to carry out his own investigation into the company rather than accept as gospel what Twitter was telling him but he decided against it and accepted what Twitter had told him. Then a few day's later after he agreed to purchase Twitter a number of news articles cames out questioning Twitters claim that they only have approx. 5% of spam/bot accounts with critics/reporters saying that they believe the number to be in the region of 25%. Then a few weeks later we hear that Musk has put the deal on hold so he can investigate this 5% spam/bot claim, something he should have done before he agreed to the deal but he didn't because he accepted Twitters word on the matter. He then persistantly asked Twitter to provide him with the necessary proof of their 5% spam/bot claim, something Twitter have failed to do, hence why he is now pulling out of the deal.

Even if Twitter's 5% fake/spam/bot accounts is false they will claim that Musk accepted everything as is and that it is his fault for not carrying out his own investigation into the company before he agreed to purchase it and therefore he has a legal obligation to honour the original deal he agreed to.

Musk should have carried out his own investigation into Twitter to clarifiy all the numbers and figures that Twitter was giving him but as he didn't, Twitter's board are now appearing to say 'tough luck Elon, if you had any concerns you should have checked rather than accept our word, the fact you didn't is not our problem and thus the deal you agreed to still stands'.

Twitter are by no means 'clean' here because they are refusing to give Musk the information he requires and thus holding him to the deal he agreed to.

Mr. Musk did do independent investigation prior to entering into the definitive merger agreement, and he continued such investigation after entering into the agreement. That's fairly typical. You can do some assessment before making a formal agreement and then, consistent with the terms of that agreement, continue to assess things until the deal is consummated. You might only get access to certain information after a definitive agreement is reached, so you might only be able to finish investigating certain issues after such agreement is reached.

That said, Mr. Musk also relied on representations made by Twitter. But that doesn't mean that he's stuck still having to consummate the deal if those representations turn out to be false. It isn't - tough luck, you believed what we said so there's nothing you can do about it if what we said was wrong. Rather, the agreement itself places certain conditions on Mr. Musk's obligation to go through with the deal. One of those conditions is that the representations made by Twitter are accurate (or their falsity doesn't have a material adverse effect). The merger agreement gives Mr. Musk the right to terminate the deal if certain conditions aren't met. It also gives him the right to request and receive certain information which might help him determine whether those conditions are met.

 

[farmboy]

Ummm, Fraud? The BoD did not own a substantial amount of shares in Twitter; yet were compensated for representing the Share Holders. The number of bots in Twitter was found to be far above the amount stated by the BoD and Sr. Management - it's THEIR JOB to know how many users are real. When you make financial misstatements with the intent to commit fraud, you have broken many Federal, State and local laws. Not the least would be

• Securities Act of 1933
• Securities Exchange Act of 1934
• Trust Indenture Act of 1939
• Investment Company Act of 1940
• Investment Advisers Act of 1940
• Sarbanes-Oxley Act of 2002
• Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

Ah, you didn't notice the key word: "INTENT". Without evidence of it, simple misstatements are not necessarily fraudulent and your premise fails. In addition a BoD does not have to own a "substantial" (whatever that means) number of shares to take executive actions, they simply have to be appropriately appointed/elected per the corporate nominations committee or shareholders at a properly convened meeting.

 

[Cognizant.]

A lot of armchair lawyers in here. Amazing.

 

[visualseed]

He paid more taxes last year than anyone in the history of paying taxes.

Because he liquidated his investments for cash. Probably before they implode. Nobody does that unless they expect a seismic shift in the valuation of their holdings which in his case is mostly companies he completely controls.

 

[pugxiwawa]

Because he liquidated his investments for cash. Probably before they implode. Nobody does that unless they expect a seismic shift in the valuation of their holdings which in his case is mostly companies he completely controls.

That’s an odd take. Musk was worth over 250 BILLIONS at time of stock sale. Are you saying selling < 10 B worth of stock, which accounts to less than 4% of his net worth is considered liquidation? You never sold any holdings that’s 4% of your net worth?

 

[Cognizant.]

Because he liquidated his investments for cash. Probably before they implode. Nobody does that unless they expect a seismic shift in the valuation of their holdings which in his case is mostly companies he completely controls.

I don't think you understand how any of this works.

 

[visualseed]

I don't think you understand how any of this works.

Those that make comments like this are usually the ones in the dark. I completely understand how this works.

 

[Cognizant.]

I completely understand how this works.

Nope.

 

[Mr D]

Those that make comments like this are usually the ones in the dark. I completely understand how this works.

Odd, because you state it as if he had a choice. So crazy how mis-informed people like you are.

 

[Carnegie]

Because he liquidated his investments for cash. Probably before they implode. Nobody does that unless they expect a seismic shift in the valuation of their holdings which in his case is mostly companies he completely controls.

You have it backward. Mr. Musk didn't pay a ton in taxes in 2021 because he sold a bunch of Tesla shares. Rather, he sold a bunch of Tesla shares in 2021 because he owed a ton in taxes.

Mr. Musk exercised options for more than 20 million shares of Tesla in 2021. That was part of his compensation for running Tesla over the last decade and for reaching certain performance targets. In exercising those options he created current income tax liability whether or not he sold any shares. So, to raise the cash needed to pay the taxes (and withholding) owed, he sold around 10 million shares.

He also sold some additional shares. But most of the shares he sold in 2021 were to pay taxes. Further, the total number of shares that he sold in 2021 - including those sold to pay taxes - was less than the number of new shares he added when he exercised those options. In other words, rather than reducing his Tesla position in 2021 he actually added to that position. He exited the year with more shares than he entered the year with.


EDIT: To correct billion to million.

 

[BruiserBear]

You’ve clearly accepted a certain message that has been catered and crafted to your liking to justify silencing opinions of the opposition.

It is your right to live in your own special echo chamber if you want. I just respectfully disagree with you.

But what is your opinion on the false reporting of the user data?

What false reporting of user data? Do you have a source for this claim?

 

[Solomani]

A lot of armchair lawyers in here. Amazing.

But none of them as brilliant as Rudy.

 

[jamcgahey]

What false reporting of user data? Do you have a source for this claim?

I mean not that I'm your personal researcher or anything, but a simple google search would have provided you the sources. Here are just two:

Twitter admits overstating audience figures for 3 years

Social media group targeted by Elon Musk reveals ‘error’ as it posts double-digit rise in users

www.ft.com

Twitter's Q1 reveals true scale of problems Elon Musk faces with his $44 billion acquisition

The Tesla CEO may have more problems than attracting wayward conservatives back to Twitter after the social media platform revealed numerous challenges.

fortune.com

And it is still unclear exactly how many bots Twitter is reports as daily active users. I didn't realize this was something that wasn't widely known. The bot issue is a problem for all major platforms. However, it is my understanding that only twitter is really counting them as their actual users. Which is a problem if people invest or attach a particular value to the company based on that particular data. I don't work for the S&P 500, but I'm sure the number of users on a social media platform that relies primarily on ad revenue is a significant factor in equating the value of a company.

My point: neither Elon nor twitter is the hero here. They both do shady stuff. So if people are going to call out one side at least acknowledge that the other side isn't perfect either. In this particular case, I think both sides are sketchy as heck.

 

[pugxiwawa]

The issue raised is not that there are lots bots exist on Twitter. You know that, I know that, and Musk knew that. The issue is that Twitter consistently, quarter after quarter, year after year, putting out official SEC filings stated bots only comprised of 5% or less of mDAUs, without providing any solid proof or even just outlined any reasonable algorithm that it used to determine that number. It's basically throwing fingers in the wind and said well I think it's about 5%, just believed me. And that is the BS that Musk is calling it out on. Could it be right? Sure, but that's highly questionable. Literally just search anything popular on Twitter and look at the identical tweets/people that show up. Very difficult to believe that bots are only 5% mDAUs.