Elon Musk Closes The Trap On Twitter
One Way Or Another, The Real Numbers On The Bots Is Going To Come Out
The negotiations resulted in a Merger Agreement being signed in April in which -after all contractual obligations had been met by the parties on each side - Musk would take control of the company for $44 billion.
Early on in May Musk began making noises about delaying the final consummation of the deal over Twitter refusing to meet it’s material obligations enumerated in the Merger Agreement, one such obligation being show him the data on the number of bots on the platform. Several legal analyst talking heads in the Fake News laughed out loud at this and began pontificating about how Elon had been ‘trapped’ by the Twitter board. There was no way he could back out, it was confidently asserted. He was simply going to have to honor the deal and hand over that $44 billion or Twitter’s board would sue him.
I had a very different take at the time, which was preserved for all posterity on my Telegram channel.
Let’s take a walk down memory lane and remember how we got here:
Let me explain that part about a "Company Material Adverse Effect" for those of you in Rio Linda.
It means if Musk had consummated this deal to purchase Twitter, and it had gone through, the company would have almost immediately suffered a catastrophic event that would have caused Twitter's value to plummet.
Because Musk would have been left holding the bag of a social media platform where a large segment of it's supposed users turn out to be bogus.
Under new honest ownership, a vast and extremely COSTLY restructuring of the entire company would have had to ensue.
With Elon taking it right in the wallet as the new owner as he watched the value of a company he had just paid $44 billion to acquire plummet straight into the freaking toilet.
HOWEVER Elon is avoiding this tragic and unnecessary fate by pulling out of the deal because Twitter's Board, CEO and staff have not met their contractual obligations under the deal that was made.
They are to this day still refusing to show him how many of the accounts are fake.
What Elon Musk is saying in that legal language is he's pulling out of the Twitter merger/acquisition deal because Twitter is very likely to soon have a "Company Material Adverse Effect' when the actual number of bots on the service is revealed.
Twitter has maintained in official filings with the SEC and with Musk in official documentation related to the proposed acquisition that the number of bot accounts on Twitter is 5% or less.
If it somehow should be definitively proven that the number of bot accounts is significantly greater than 5%, that means Twitter isn't really worth the $44 billion price and that both Twitter's stock and it's advertising rates are inflated and do not reflect the company's actual value or reach.
Musk gives 3 distinct reasons for terminating the Merger Agreement:
He claims that
1) Twitter is in material breach of multiple provisions in the agreement
2) Twitter appears to have made false and misleading representations to Musk that he relied upon being true and factual when he entered into the Merger Agreement
and
3) Twitter is likely to soon suffer a Company Material Adverse Effect, which is a major shakeup that will cause the value of the company to decline.
Musk is directly hinting that if he went through with this $44 billion Merger Agreement, he believes something would come to light that would cause the value of the company to suddenly drop so that it would be worth significantly less than the $44 billion he'd just paid for it.
I don't know who needs to hear this, but Monday is....
7-11
Elon dropped his letter on Friday afternoon JUST AS THE MARKETS WERE CLOSING.
Monday is gonna be a BLOODBATH FOR TWITTER.
As the value of the stock plummets like a stalled jet to Earth.
It's already started.
I suspect....Elon already knows exactly how many fake accounts there are on Twitter.
He will have forensic evidence to prove it.
Remember this?
Remember: the deal hadn't been closed yet. The offer was agreed to but we're still in the interim period where both parties had to fulfill all of their contractual obligations so it could be finalized.
ELON HADN'T TAKEN POSSESSION OF TWITTER YET.
Anybody telling you differently, that it was already a done, finished and completed deal is either speaking ignorance or is misleading you.
Elon and his legal team are saying in the letter terminating the agreement to purchase Twitter for $44 billion that Twitter's board had continued to resist fulfilling their contractual obligations, which included clearly showing the prospective new owner the data about fake accounts on the platform.
Elon is saying "You were supposed to show me this data and you haven't done it, so the deal is now off."
If Twitter's board fights this, they're going to essentially end up arguing "NUH UH! We never had to show you any data about fake accounts for this deal to be consummated and for us to get your $44 billion dollars. You simply had to take our word for it!"
That does not look like a winning position to me.
Meanwhile…
Whatever happens on the morning of 7/11/22, it won’t be boring!
And you can quote me on that!
The Musk haters are REEing their hearts out in online comments sections on YT.
These aren’t just Twits but Musk haters in general.
As for Musk, he had better be using the same personal security outfit that Trump uses because he’s pissed off the US Intel agencies and complicated their plans and we know how they deal with complications.
It seems to me that if the board knowingly misrepresented the percentage of bots, it goes beyond simple fraud and into the criminal realm. Kind of like outright stealing 10-20 billion dollars.
The MSM has become too predictable - you know you're over the target when the MSM starts smearing Elon, the poster-boy of Green Energy.
As always, thanks for the great reporting, Brian, and God Bless!