Twitter v. Elon v Twitter: Elon Finally Hits A Vein

A whistleblower helps Elon's case to break his Twitter buyout, but he still has to prove deliberate fraud. Twitter can more easily prove Elon has buyers remorse—not grounds to terminate the deal.

Twitter (TWTR 0.00%↑) shareholders approved last week, as widely expected, the $44 billion takeover agreement bullied through by Elon Musk in April.

Back then I had expected Twitter would be forced to Take The Money and Run, no matter how much it may despise the buyer. The price Elon rammed down Twitter’s throat—his “best and final offer”—proved to be comically high at $54.20 per share.

That was higher than Twitter stock had traded since November last year and still 30% higher versus the closing price today at $41.70. No other buyer was likely to bid higher—there were no other buyers.

So few believed Elon, certainly not me, when he said he didn’t care about the economics of the deal (see Elon Buying Twitter? Probably Not, 4/14/22).

Elon cares very much about money: specifically, not spending his own. So I expected Elon’s enchantment with buying Twitter to sour as soon as his $44 billion obligation sunk in. Then Elon would realize what was seemed clear to me: that he didn’t “win” Twitter, he was the bag holder (see Twitter: Take The Money and Run, 4/26/22).

But 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.

This was the best news Twitter bondholders might get, as I noted in July:

A buyout of the company triggers an exit for bondholders to sell out via the change of control put at 101% of par (see Twitter: Take the Money And Run, 4/26/22). This is far superior to limping along indefinitely as the company struggles with dying revenue momentum and escalating costs, even before it started funding its massively expensive battle with Elon plus potentially related lawsuits from other stakeholders if it fails to prevail.

Finally, Hopeful News For Twitter Bondholders: Court Grants Fast-track Trial Against Elon, 7/20/22

It was going reasonably well, until…

I expected trouble to materialize as soon as Elon encountered more difficulty than he expected in lining up external financing (see Twitter: Take The Money and Run, 4/26/22) and Elon Gets a Boost From Friends For His Twitter Buyout—And Takes *Some* Of The Heat Off Himself, 5/5/22):