Running Twitter into the ground for 50 a share sounds like a great deal for shareholders. Heck, given the cesspool that Twitter is, it might even be good for society.
It would suck for Musk and his financers, but they have a simple alternative: stick to the agreement they signed. It's not like the risks of merger agreements are unknown. And the waiving of due diligence wasn't a minor, easy to miss, point either.
Musk wants to back out because of price. He cannot, and he is throwing the equivalent of a tantrum.
I do hope this doesn't end up with Musk losing control of spaceX. Some actual quality is comming out of there.
The contract does not give many avenues. It is either a 'materially adverse effect', 'breaking a covenant', or not being able to get the loans he wanted lined up.
-Materially adverse effects are not within play here. The threshold for that is really high.
-The loans are committed. Banks have signed for the loan, and they can't get out of it.
- That leaves the covenants. That is the main approach Musk is trying, but it is a stretch.
The only other avenues to get out are:
- Get Twitter to amend the contract
- Ignore the contract
Threatening to try the second (which would really suck for twitter, even if it almost certainly won't work) might be a way to get twitter to do the first. But I get the sense that the board feels they have a strong position. Moreover the board is likely getting a lot of pressure from shareholders to not give in to Musk.
It would suck for Musk and his financers, but they have a simple alternative: stick to the agreement they signed. It's not like the risks of merger agreements are unknown. And the waiving of due diligence wasn't a minor, easy to miss, point either.
Musk wants to back out because of price. He cannot, and he is throwing the equivalent of a tantrum.
I do hope this doesn't end up with Musk losing control of spaceX. Some actual quality is comming out of there.