Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

Post by bilateralrope »

Gandalf wrote: 2022-05-01 06:08am Is there a point past which Musk can't retract his bid? Because I could also see him just going "lol nah" and backing away.
I've found an article than answers that question. The short answer is that, if Musk can prove certain conditions are met he can cancel the deal and pay a $1 billion breakup fee. Otherwise he will be forced to go through with it.

Twitter board tells Elon Musk: We will not alter the deal
Board vows to enforce $44 billion agreement despite Musk's waffling and complaints.
JON BRODKIN - 5/19/2022, 4:31 AM


With Elon Musk waffling on his commitment to buy Twitter for $44 billion, Twitter's board of directors yesterday said it intends to enforce the merger agreement at the original price.

"The Board and Mr. Musk agreed to a transaction at $54.20 per share. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement," the Twitter board said in a statement reported by CNN and other media outlets. Twitter on Tuesday also released a preliminary proxy statement laying out reasons shareholders should approve the deal.

"Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable," the company said in a press release announcing the proxy statement.

Exit options

The sale agreement lets either Twitter or Musk kill the deal and pay a breakup fee of $1 billion under certain circumstances. For example, Musk would have to pay the termination fee if he "fails to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement."

However, Musk can't necessarily get out of it based solely on his complaints about the number of spam accounts on the social network. As Bloomberg wrote, the merger agreement also "includes a specific performance provision that allows Twitter to force Musk to consummate the deal, according to the filing. That could mean that, should the deal end up in court, Twitter might secure an order obligating Musk to complete the merger rather than winning monetary compensation for any violations of it."

That provision can be found in section 9.9 of the merger deal. If Twitter meets its obligations under the agreement, it "shall be entitled to specific performance or other equitable remedy" to "cause the Equity Investor [Musk] to fund the Equity Financing, or to enforce the Equity Investor's obligation to fund the Equity Financing directly, and to consummate the Closing," the agreement says.

Twitter and Musk agreed that if either party fails to take required actions to consummate the agreement, there would be "irreparable damage for which monetary damages, even if available, would not be an adequate remedy." Twitter or Musk would thus "be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity."

The deal also has a non-disparagement clause that says Musk can tweet about the merger "so long as such Tweets do not disparage the Company or any of its Representatives," but Musk has repeatedly criticized Twitter and its representatives since signing the deal.

Musk threatened to kill deal over spam data

Musk on Tuesday said the "deal cannot move forward" until Twitter provides data behind its estimate of spam accounts. He also said this week that renegotiating the deal at a lower price is "not out of the question."

But Musk's offer to buy Twitter waived "business due diligence," and the Twitter board relied on that commitment when it approved the transaction and recommended that shareholders vote for it. Twitter's proxy statement told shareholders that one reason to approve the agreement is "the likelihood that other potential acquirers would require substantial due diligence, creating a delay and risk to reaching the signing of such a potential transaction."

As we've previously written, Musk says he thinks at least 20 percent of Twitter accounts are fake or spam, while Twitter said in a Securities and Exchange Commission filing that fewer than 5 percent of monetizable daily active users (mDAUs) are spam or fake. Those numbers are not incompatible, as Musk seems to be talking about all accounts, while Twitter's 5 percent stat refers to accounts that are logged in and can see ads each day. Yet Musk has insisted that Twitter's data is wrong and rejected the explanation offered by Twitter CEO Parag Agrawal.

Musk “has produced no evidence at all”

Bloomberg Opinion columnist Matt Levine took Musk to task for trying to halt the deal over spam numbers despite no new information about spam becoming available since Twitter accepted his offer to buy the company:
He has produced no evidence at all that Twitter's estimates are wrong, and certainly not that they are materially wrong or made in bad faith. (Musk can only get out of the deal if Twitter's filings are wrong in a way that would cause a "material adverse effect" on Twitter, which is vanishingly unlikely.) His own supposed methodology for counting spam bots is laughable. Yesterday, Twitter's chief executive officer, Parag Agrawal, tweeted a thread explaining in general terms how Twitter estimates that fake accounts represent fewer than 5 percent of its count of active users and how this analysis can't be easily replicated by outsiders (because they don't know which accounts are real, and also because they don't know which accounts Twitter counts as daily active users). It seems clear that Agrawal's thoughtful answer is basically correct. Musk responded with a poop emoji.

More important, nothing has changed about the bot problem since Musk signed the merger agreement. Twitter has published the same qualified estimate—that fewer than 5 percent of monetizable accounts are fake—for the last eight years. Musk knew those estimates and declined to do any nonpublic due diligence before signing the merger agreement. He knew about the spam bot problem before signing the merger agreement, as we know because he talked about it constantly, including while announcing the merger agreement. If he didn't want to buy Twitter because there are spam bots, he should not have signed a contract to buy Twitter. No new information has come to light about spam bots in the last three weeks.
It's more likely that Musk is "angling to reprice the deal for straightforward market reasons" amid a rough stretch for Tesla and other stocks, but "that is very clearly not allowed by the merger agreement that he signed: Public-company merger agreements allocate broad market risk to the buyer, and he can't get out just because stocks went down," Levine wrote. Twitter's stock price was a bit over $37 as of this writing
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

Post by LadyTevar »

So, he's trying to weasel out of letting his mouth talk bigger than his assets, and Twitter is holding him to the deal.

Good.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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He waved due diligence?!?!?

That is the stupidest thing you can do in a business purpose!

He can now be on the hook for everything Twitter has done up to the second he takes ownership!
In Canada, that would mean that if Twitter owed the government taxes, he'd be on the hook for them!

Elon Musk - the $44 Billion Dollar IDIOT
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Read a twitter thread about it awhile ago: https://twitter.com/Esqueer_/status/1526314979863015425

Long story short, it's probably not stupid because between demanding evidence of things that are difficult to prove as a pretext and exploiting flaws in the legal standard for disparagement to tank Twitter's stock value by trolling them with impunity coupled with the fact that he is a billionaire and can ignore many regulations he can very likely draw out enforcement of the contract to buy Twitter for years in exchange for what will in the long-run be a negible amount of money to him.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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He's backing out.

Elon Musk is ending his $44bn (£36bn) bid to buy Twitter, alleging multiple breaches of the merger agreement.

The announcement could bring to an end a long-running saga after the world's richest person decided to buy Twitter in April.

Mr Musk said he had backed out because Twitter failed to provide sufficient information on the number of spam and fake accounts.

Twitter says it plans to pursue legal action to enforce the agreement.

Mr Musk faces a $1bn (£830m) break-up fee and possible lawsuit by opting out.

In May, he said the deal was "temporarily on hold" as he was awaiting data on the number of fake and spam accounts on Twitter.

The billionaire businessman had asked for evidence to back the company's assertion that spam and bot accounts make up less than 5% of its total users.

In a letter, Mr Musk's lawyer said Twitter had failed or refused to provide this information.

Spam accounts are designed to spread information to large numbers of people and manipulate the way they interact with the platform. On Thursday, Twitter said it removed around 1 million spam accounts each day.

Twitter chairman Bret Taylor said the company would pursue legal action to ensure the merger went ahead.

"The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk," Mr Taylor wrote in a tweet.

Shares in Twitter fell by 7% in extended trading after the announcement.

Mr Musk, said to be the world's richest person, is the founder of rocket company SpaceX and electric car company Tesla.
So big legal battle incoming, I guess.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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It was called out at the start that Musk had waived Due Diligence. He's boned. Well, as boned as a guy with an army of lawyers and bottomless bank account can get. At least his stupid is on display at Ludicrous Speed.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Depending on the $ penalties in the contract, it actually might be easier for Elon to go 'meh, fuck it', and just pay them off.

Looks better for him to.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Solauren wrote: 2022-07-10 10:11pm Depending on the $ penalties in the contract, it actually might be easier for Elon to go 'meh, fuck it', and just pay them off.

Looks better for him to.
Musk would have to pay $1 billion if the sale doesn't go through. However the contract also has a specific performance clause which lets Twitter force the sale to go through as long as they fulfill their responsibilities for the sale any no regulator steps in to block it.

In theory, Twitter's board could negotiate a price with Musk to let him walk away. But then the board would be facing a lawsuit from Twitter shareholders.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Solauren wrote: 2022-07-10 10:11pm Depending on the $ penalties in the contract, it actually might be easier for Elon to go 'meh, fuck it', and just pay them off.

Looks better for him to.
I don't think you appreciate how much money 44 billion dollars is.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Last I heard, Musk didn't have $44 billion in cash and he was having some trouble getting financing. Partly because the price of Tesla stock, that was going to be used as collateral, had dropped.

If he can't get the financing, he can still afford the 44 billion. But he's probably going to have to sell off stock in Tesla and other companies quickly enough to affect their stock price. So it's probably going to cost him more than the price tag suggests.

Though I expect that he will be able to get the financing once he realises that he can't get out of the deal he agreed to.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Ralin wrote: 2022-07-11 01:07am
Solauren wrote: 2022-07-10 10:11pm Depending on the $ penalties in the contract, it actually might be easier for Elon to go 'meh, fuck it', and just pay them off.

Looks better for him to.
I don't think you appreciate how much money 44 billion dollars is.
I was speaking of penalties for not buying (and not having to buy twitter after paying those penalties) vs lawyers and court fighting.
Assuming that's a viable option. Really, depends on the contract.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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That's where the specific performance clause comes in. That clause is really something, since it means they can genuinely just make Musk buy. The actual penalties by comparison are trifling and there's really no reason for Twitter to settle for them.

Now, the odds of successfully compelling that specific performance aren't great because of the extreme value involved and Musk not actually having enough money, but Delaware's chancery is not averse to ordering it so its still on the table - its just a question of actual enforceability since he may genuinely not have the capital. So with that in mind, the real value of the clause is that it permits them to look at the failure to perform penalties (something in the region of 2 billion IIRC - 1 billion for standard failure, another for bad faith tucked away in there) and then just shrug and go 'no, we'd like twenty billion as a settlement, thank you' - or, since the Board didn't exactly want to be acquired, to drag Musk's lawyers through years of brutally expensive litigation against a powerhouse firm and then at the end still be able to demand a truly vast sum of money as a real 'fuck you, dude'.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Perhaps they could settle for $20B worth of Tesla stock to walk away, then immediately dump it to crash the share price.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Ralin wrote: 2022-07-11 01:07am
Solauren wrote: 2022-07-10 10:11pm Depending on the $ penalties in the contract, it actually might be easier for Elon to go 'meh, fuck it', and just pay them off.

Looks better for him to.
I don't think you appreciate how much money 44 billion dollars is.
I’m not sure you appreciate how much money Elon Musk is worth. He could get the cash, but he’d probably have to put up some multiple value of Tesla stock as collateral since it’s overvalued to the point of total absurdity and everyone knows it.
I had a Bill Maher quote here. But fuck him for his white privelegy "joke".

All the rest? Too long.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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FireNexus wrote: 2022-07-12 01:25pm
Ralin wrote: 2022-07-11 01:07am
Solauren wrote: 2022-07-10 10:11pm Depending on the $ penalties in the contract, it actually might be easier for Elon to go 'meh, fuck it', and just pay them off.

Looks better for him to.
I don't think you appreciate how much money 44 billion dollars is.
I’m not sure you appreciate how much money Elon Musk is worth. He could get the cash, but he’d probably have to put up some multiple value of Tesla stock as collateral since it’s overvalued to the point of total absurdity and everyone knows it.
I thought the stock did take a major dip over this
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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As expected, Twitter has commenced suit seeking specific performance. The moral of the story: never sign a massive contract making you, individually, liable for the specific performance of an overinflated purchase price unless you actually plan to follow through, because it can and will bite you in the ass so hard you'll have no choice but to run back to daddy's emerald mines and hide in a tunnel.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Good. I hope those assholes are tied up with lawsuits until they're all fucking broke. Musk is a shitbag and twitter is a fucking cancer.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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aerius wrote: 2022-07-13 09:14am Good. I hope those assholes are tied up with lawsuits until they're all fucking broke. Musk is a shitbag and twitter is a fucking cancer.
The sad part is, if what I read once is true, Twitters original purpose was a pretty good idea. A common platform for companies to make quick announcements on.
Users would subscribe to specific companies for announcements/recalls/notices, without having to give them their email.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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FireNexus wrote: 2022-07-12 01:25pm
Ralin wrote: 2022-07-11 01:07am
Solauren wrote: 2022-07-10 10:11pm Depending on the $ penalties in the contract, it actually might be easier for Elon to go 'meh, fuck it', and just pay them off.

Looks better for him to.
I don't think you appreciate how much money 44 billion dollars is.
I’m not sure you appreciate how much money Elon Musk is worth. He could get the cash, but he’d probably have to put up some multiple value of Tesla stock as collateral since it’s overvalued to the point of total absurdity and everyone knows it.

He already has the money. In order to sign the contract he had to liquidate stock and arrange significant financing from Morgan Stanley (and Goldman) under contract. The money is, in theory anyway, ready to change hands. (There is a conspiracy theory that the reason he did this and then moved to get out of the deal was to have cover to legally liquidate the Tesla stock. I find that dubious given Musk being Musk.)

Also, the monetary penalty on bailing on the contract is capped at $1 Billion. But... that's irrelevant because he can't legally bail on this contract, there is no out. He signed a deal saying he was going to buy Twitter at a specific price, and the clauses in it let Twitter force him to buy the thing. There's no takesies-backsies "I changed my mind and pay the penalty" clause. Twitter can force him to buy it, and there is strong precedent that lets Twitter do just that.

Also, importantly, Twitter's board seems ready to bail on the entire enterprise (you don't agree to sell out to Elon without a very strong desire to want to get out of the business in the first place, and the entire thing just stinks of resignation), and any legal costs they take on (and they've hired Wachtell, who are the most terrifying of the Big Law firms in NYC and the most expensive) are basically going to be Musk's when they win, so no reason to back down.

I mean... maaaaaaybe twitter agrees to renegotiate the price down a bit to let Musk off the hook given circumstances, but why do that when they already have him in the bag and why believe him that he'll follow through this time?
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Straha wrote: 2022-07-15 05:09am
Also, the monetary penalty on bailing on the contract is capped at $1 Billion. But... that's irrelevant because he can't legally bail on this contract, there is no out. He signed a deal saying he was going to buy Twitter at a specific price, and the clauses in it let Twitter force him to buy the thing. There's no takesies-backsies "I changed my mind and pay the penalty" clause. Twitter can force him to buy it, and there is strong precedent that lets Twitter do just that.
Why is there a penalty clause for backing out if it's not possible for him to back out?
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Ralin wrote: 2022-07-15 06:24am
Straha wrote: 2022-07-15 05:09am
Also, the monetary penalty on bailing on the contract is capped at $1 Billion. But... that's irrelevant because he can't legally bail on this contract, there is no out. He signed a deal saying he was going to buy Twitter at a specific price, and the clauses in it let Twitter force him to buy the thing. There's no takesies-backsies "I changed my mind and pay the penalty" clause. Twitter can force him to buy it, and there is strong precedent that lets Twitter do just that.
Why is there a penalty clause for backing out if it's not possible for him to back out?
Because they negotiated increasingly outrageous terms from a position of strength, termination fee clauses are pretty standard in high level negotiations, and since the penalty clause involved may still be viable even if the Chancery declines to enforce performance for whatever reason and Musk ignored (beyond a doubt) his own lawyers screaming 'do not sign this, jesus christ dude' there was no reason for them to remove it after they secured the specific performance clause. Essentially, the contract is like if you walked into a bar and said 'give me the worst fucking drink you have, I'm serious, just fill a glass from the toilet and dump in a bunch of bleach while you're at it, I'll drink it, I do not care what's in it'. The result is a contract with some amazing 'fuck it, why not?' clauses and a piece of litigation that contract law students will be studying for years, in no small part as an exercise in exactly what to tell your client not to do, not to sign, and not to tweet, and as a laundry list of clauses you'd wish you got to include as a seller.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Ralin wrote: 2022-07-15 06:24am
Straha wrote: 2022-07-15 05:09am
Also, the monetary penalty on bailing on the contract is capped at $1 Billion. But... that's irrelevant because he can't legally bail on this contract, there is no out. He signed a deal saying he was going to buy Twitter at a specific price, and the clauses in it let Twitter force him to buy the thing. There's no takesies-backsies "I changed my mind and pay the penalty" clause. Twitter can force him to buy it, and there is strong precedent that lets Twitter do just that.
Why is there a penalty clause for backing out if it's not possible for him to back out?
Because that clause triggers if the deal fails for any reason. For example, if regulators block it or Twitter lets Musk walk away.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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It's honestly an impressively terrible set of choices on Musk's part. You genuinely don't see many cases that actually read like a first year contracts problem designed to see if you can spot all the ways your client is screwed, and yet... Here we are.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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loomer wrote: 2022-07-15 09:29am It's honestly an impressively terrible set of choices on Musk's part. You genuinely don't see many cases that actually read like a first year contracts problem designed to see if you can spot all the ways your client is screwed, and yet... Here we are.
Honestly, at this point, having read some of the stuff Twitter is releasing now on the deal (they've been silent until now), I have to wonder if Musk could get the entire thing voided claiming he was under the influence of drugs.

Because at this point, that's his only possible escape. He's screwed, and it's his own fault.

Then again, this might be part of his plan at the moment.

Consider - he's attached to a least one high profile media case (i.e Amber heard). Causing this shitstorm, knowing he's going to have to pay anyway, might be his attempt to distract people from other high profile cases. He doesn't care about public perception, and in his mind, he's doing someone a favor.

I highly doubt it, but still, worth a consideration.
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Re: Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

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Solauren wrote: 2022-07-15 10:54am
loomer wrote: 2022-07-15 09:29am It's honestly an impressively terrible set of choices on Musk's part. You genuinely don't see many cases that actually read like a first year contracts problem designed to see if you can spot all the ways your client is screwed, and yet... Here we are.
Honestly, at this point, having read some of the stuff Twitter is releasing now on the deal (they've been silent until now), I have to wonder if Musk could get the entire thing voided claiming he was under the influence of drugs.
That could easily be worse for Musk in the long term than him following the deal. Because anyone thinking of doing business with him, or his companies, in the future is going to be asking if he's on drugs this time.

A claim of "I was high" will probably require him to prove which drugs he was using. If any of them are illegal, he's going to have a fun choice. Plead the fifth, which allows the judge/jury to draw a negative inference in civil cases. Or provide enough evidence to make things very easy for any prosecutors who think it would be good for their career to go after him.
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