#7 | Posted by catdog at 2022-10-07
My money is on the following: Musk cannot raise the money to make the buy, and his dodgy behavior is geared toward trying to get TWTR to renegotiate a deal that gave Elon almost no outs in his initial offer. The renegotiation will not take place, because TWTR has its eyes on the $1B breakup fee which they believe will be coming their way, like a great Xmas present. Elon had better find his checkbook...
Your assumptions are wrong because your math doesn't work.
If TWTR wanted to get $1B in breakup fee, they could get this immediately after Musk backed down and "put on hold / terminated" the buyout agreement, and Musk would be ecstatic to get off this easy, that's what he essentially was trying to do all during this lawsuit drama - he will have to pay at least $11B in taxes on profits from his TSLA stock sales alone that he already has made and expects more to be made this year, to secure financing spelled out in initial agreement, so $1B of tax writeoff to get out of the mess he created would be like a Xmas present for him. Some of potential co-investor PE firms have already dropped out when Musk started trashing Twitter, so he did himself no favors with the "scorched earth" tactics.
It was never about $1B breakup fee. Musk took the bait hook, line, and sinker and TWTR board is making sure he doesn't wiggle out of it, doing what's best for their shareholders - selling TWTR at the highest possible price, which is about $44B at $54.20/share. Math is very simple : $1B = ~$1.25/sh of TWTR - peanuts compared to how much TWTR stock would crash if this deal is not consummated, and would keep dropping due to damage Musk inflicted on company... Of course, Musk being Musk, he could then decide that at much lower price, let's say $34.20 or $24.20 or $14.20 it would make sense to buy TWTR, creating yet another market and legal mess... but since when did that stop him?
The latest and the last try of Musk's lawyers to sneak a stink bomb into the deal - saying he "agrees to the terms of the original agreement" while actually agreeing on the original price but really introducing the new terms in the new agreement - was soundly rejected, so judge played it cool and gave Musk extra time to make sure he has time to confirm the financing from the banks - which should amount to $11B-$13B of total price - and no legal hitches for appeal. Musk has great legal team in Skadden Arps; Twitter has great legal team in Wachtell Lipton, assisted by premier Silicon Valley firm Wilson Sonsini - neither miss much, at over $1000 an hour.
Musk can say he doesn't have the financing, or worse yet, try to sabotage it, but that will only do more reputational damage to himself and his companies, might earn him penalties for duration until closure (with or without his cooperation) and in the end will be just as "successful" as his other excuses to get out of the deal.
This saga is at an endgame and is almost over - Musk will "win" Twitter! "So much winning!"
Elon had better find his checkbook...
That's true, but it will cost him a lot more than $1B breakup fee.