Elon v. Twitter: Elon Caved...For Sure...Maybe
Elon to Judge: Twitter Lies! Twitter is a fraudster! I'm NOT buying Twitter! Also Elon: Never mind. Carry on. Twitter: Hmm. Elon's Bankers: WUT? WE HAVE TO SELL "CCC" LBO BONDS NO ONE WANTS TO BUY?
Remember when Elon Musk sent a letter to Twitter (TWTR 0.00%↑) last July announcing he just decided to terminate their signed agreement for him to buy the company?
“That’s not how contracts work,” said Twitter, which promptly sued Elon to have the court compel him to buy the company as agreed.
Twitter is right. As I remarked again recently:
Twitter has a strong contract, thanks to Elon, which he seems locked in to close:
Buying Twitter was Elon’s own idea, wholy unwelcomed by Twitter, and rushed to completion by him in a less than two weeks.
Elon picked his bloated $54.20 price more as as a weed joke rather than the result of exhaustive due diligence, which he waved off as unnecessary.
Elon personally guaranteed the $44 billion deal funding backed by his considerable resources as the richest man on the planet.
Twitter v. Elon v Twitter: Elon Finally Hits A Vein, 9/20/2022
So, Elon sued Twitter to break the deal because, he claimed, Twitter lied about its spam bot problem, and he had relied on Twitter’s claims and public filings to make his decision to buy the company.
Elon’s complaints weren’t as convincing as he hoped, since Twitter had publicly disclosed for years details about its problem spam bots, how it calculates it, and that it could be off in estimates. Anyway, Elon had clearly about Twitter’s spam bots and still decided to waive off any due diligence before ramming the deal to a close. The real truth was, by all appearances, that Elon had developed severe buyers remorse (see Elon's Trying To Get Out Of Buying Twitter—As We Knew He Would, 6/7/22).
Elon’s case gained more traction when a whistleblower appeared with a credible complaint that Twitter had serious security issues it hadn’t disclosed. However, as I and many others have noted, this didn’t prove what Elon needed to break his agreement to buy Twitter:
Mr. Zatko’s allegations are not the slam dunk Elon believes they are. They indicate widespread sloppiness and disorganization with security that left Twitter vulnerable, and that the company tried to conceal such failings, but Mr. Zatko provided no specific evidence for his claims. Twitter denies his allegations since, it claims, Mr. Zatko never told them before he was terminated for poor performance.
Even if Mr. Zatko’s claims are all true, he doesn’t prove that Twitter was maliciously deceitful or that revelation of said security problems would have a devastating effect on Twitter’s business or prospects. This is necessary to prove Twitter deliberately defrauded Musk as well as harmed its investors.
Twitter v. Elon v Twitter: Elon Finally Hits A Vein, 9/20/2022
We may have been right, or at least Elon may have decided as much.
Events in the case over the past couple of weeks apparently haven’t worked out as well as Elon hoped. These included depositions from the whistleblower and Twitter