There's a $19B difference between Twitter's market cap and the agreed deal proceeds.
Twitter has to pursue receiving that-- either in consummation of the deal or adequate recompense. If their board doesn't, they'll be sued into oblivion by their own shareholders. It's do-or-die.
That doesn't mean, though, if they were offered a couple billion less for Twitter and were sure that Musk would then close... that they might not blink, rather than wobble $19B+ on a court case.
The problem is, a $2B discount on Twitter doesn't improve Musk's financial condition much or make the deal materially less stupid for him.
There has been enough uncertainty--on both the Musk and Twitter ends--for the banks to have several legitimate reasons to "blow up his financing."
Per Levine:
But it’s messy, and you can sort of see a path to “Musk says the deal is off, so his banks walk away, so his financing isn’t available, so he doesn’t have to close the deal and can get away with just paying $1 billion.”
And the "Musk says the deal is off" part doesn't even have to enter into it. The banks could come, independently, to a last-minute change of opinion on his collateral--whatever that was for this deal.
When it comes to "sued into oblivion by their own shareholders", who exactly are they? ETFs & mutual funds, of which Twitter is only a fraction of a sliver of their portfolio? CIA/DOD "dark money", stirring up foreigners (& domestics!) against "rogue" regimes (i.e. "arab spring")? Large shareholders (like Saudi, or hedgies), who were the ones giving the board up-to-the-minute instruction on how to (mis)handle the Musk offer in the first place?
Twitter has been a propaganda asset for a long time. The large stake-holders surely understand that they have far more to lose in discovery & cross-examination than Elon's offer. I am talking Snowden-tier revelations here.
> There has been enough uncertainty--on both the Musk and Twitter ends--for the banks to have several legitimate reasons to "blow up his financing."
If Musk can't close because he's blown up his financing... you think this lets him get off clean? He's attempting to walk away before any such eventuality has occurred and Twitter shareholders are incurring costs.
> The banks could come, independently, to a last-minute change of opinion on his collateral--whatever that was for this deal.
If that happened, that's something he should have argued in his letter and something there would be evidence of before Musk tried to walk away.
> When it comes to "sued into oblivion by their own shareholders", who exactly are they?
High powered law firm representing a few chosen shareholders that gets a class designated of all Twitter holders that don't opt out.... just like substantially all shareholder lawsuits of public companies.
Asking this question this way makes me wonder if you have any background knowledge here at all.
Yes. I understand how class action works. If Twitter were a normal company, that's what one would (correctly) expect to happen. But it isn't. I think Twitter would take on a class action before airing its dirty laundry.
> My words were "slap on the wrist." I think only having to pay $1B instead of $46.5B meets the criteria.
The real wobble is about $19B-- the difference between Twitter's market value and the acquisition offer. I think it is likely Elon pays well in excess of $1B, but maybe captures a little bit of that $19B for himself.
> That's Levine's analysis of, "if the banks don’t put up their $13 billion then he doesn’t have to put up his $33.5 billion".
Yah, and getting the banks to walk and then trying to walk from the deal would be a way to try and pay only $1B. The problem is, he's walked before the banks.
Twitter has to pursue receiving that-- either in consummation of the deal or adequate recompense. If their board doesn't, they'll be sued into oblivion by their own shareholders. It's do-or-die.
That doesn't mean, though, if they were offered a couple billion less for Twitter and were sure that Musk would then close... that they might not blink, rather than wobble $19B+ on a court case.
The problem is, a $2B discount on Twitter doesn't improve Musk's financial condition much or make the deal materially less stupid for him.