Twitterless
Elon backs out.
The AP reports: Musk abandons deal to buy Twitter; company says it will sue.
Elon Musk announced Friday that he will abandon his tumultuous $44 billion offer to buy Twitter after the company failed to provide enough information about the number of fake accounts. Twitter immediately fired back, saying it would sue the Tesla CEO to uphold the deal.
The likely unraveling of the acquisition was just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms, and it may portend a titanic legal battle ahead.
Twitter could have pushed for a $1 billion breakup fee that Musk agreed to pay under these circumstances. Instead, it looks ready to fight to complete the purchase, which the company’s board has approved and CEO Parag Agrawal has insisted he wants to consummate.
I do not pretend, in the least, to be an expert on finance of any kind, let alone on the topic of acquisitions of this magnitude, but I will admit that this seemed like where we would end up from the very beginning. Musk’s flirtation with buying Twitter always seemed like a massive vanity play to me, so the notion that he is trying to back out is no shock.
In general, the notion that an individual could have enough capital to outright purchase a singular publishing platform like Twitter raises a host of questions about not only that much capital accumulation by a single person but also sole ownership of something like Twitter. Those are deep politico-philosophical questions that were somewhat obscured by Musk’s brand of performance art, and the supposed political implications of the purchase, as highlighted by a Politico piece: Elon Musk quits Twitter deal, roiling Trump world.
In regard to that piece, I would note a great example of an ongoing genre of people who seem not to understand free speech as a concept, not censorship:
The move spurred fresh attacks on Twitter’s existing management, including from Donald Trump Jr., who said it showed that censorship is going to be alive and well.
“I can almost guarantee that whatever censorship they were doing will be back tenfold at this point. Zero chance of free thought or speech there at this point,” Trump Jr. posted on Truth Social, the social media site backed by his father.
Says the guy who can get international press coverage for what he says, and whose father invested in his own social media outlet.
You know, the classic hallmarks of being censored.
Win or lose, this is a jobs program for lawyers. So many are going to hit their billable hours targets for at least a year or two…
In terms of his public face Elon looks to me like a guy riding a bike when the front wheel starts to wobble and the wobble gets worse and he may just right himself, but it’s equally possible he’s gonna fall over in a ditch. He’s another Trump, a guy born on third base who thinks he hit a triple.
When we decided to buy an EV we eliminated Tesla on the grounds of lousy build quality, absence of luxury, that stupid fking touch screen. . . and the fact that the guy who runs the company is an unstable head case. And that was before he decided to start trashing liberals who are his main customers.
Just one point. Concentrating capital in as few hands as is possible is undoubtedly the greater good here. It is a well understood law of economics that insufficient capital holdings among the job creators strangles innovation to the point that even taxation of the wealthy needs to be frowned upon as counterproductive and ill-conceived from an economic standpoint. Beyond that, spreading capital holdings among a larger subgroup of the population would undoubtedly be disastrous given that many, if not most, of the larger group would remove the capital they acquired from the capital market–wasting it on things like food, clothing, and shelter for their children. Clearly a compounding disaster. Things are much better as they are without discussing issues of how much capital individuals should accumulate.
Act III of this vanity play is that the American Legal System for Super Rich People will protect him from the most damaging consequences of his hubris. I long for the theatrics of the ancient Greeks who assured us that powerful assholes would get their just deserts.
A $44 billion impulse buy that he now regrets? See, the rich ARE just like us.
IANAL so can’t speak to the finer points of contract law but a whoooooooooole lot of lawyers sure are gleeful over this. Class action suits as far as the eye can see.
@Argon:
To borrow from a commentator elsewhere, Twitter’s attorneys will do all sorts of performance lawyering right up until discovery is about to start, and will then settle. The techbros’ companies all lack the internal discipline to make discovery anything but a nightmare.
My favorite discovery story is about the Monday morning I showed up at work and my (oversized) cubicle had yellow crime tape across the doorway, with a note saying that the legal department would be conducting discovery. I dropped by from time to time to see if they had finished. At some point they were taking the hard drives out of the various computers and putting them in a rig that did a bit-for-bit copy. (That tells you how long ago this was, copying entire hard disks has become impractical.) I noticed that when the disks from the Linux boxes were put in the rig, after a few seconds a red light came on, and they put the disks back. When I asked, they showed me the discovery request that explicitly said “copies of hard disks formatted for Windows or Macintosh personal computers.” “Well, heck,” I told them, “Anything incriminating for this case is going to be on the Linux disks.”
Indeed. Thomas Piketty, for instance, makes a good case that we’re getting back to Gilded Age levels of capital concentration, and with it, beyond Gilded Age levels of political influence.
@Michael Reynolds: Musk is not in any way another Trump. Unlike Trump he has real operational accomplishments in his companies, and has show an operational acumen that Trump never has (except in the negative). His only commonality with Trump is a certain natural genuis in modern self-promotion. Now of late he’s gone a bit on a bender to annoy you lot (and rather not help associated companies image), but he’s no Trump historically in operational business terms (this of course is neither here nor there relative to him as a person in social terms).
As for the finance of the deal: amongst financial circles it has been the fair bet this was going to be the result, however even net break-up fees and legal costs, on a tax adjusted basis Musk may very well come out modestly ahead on a cash basis as he managed to achieve a significant sale of Tesla stock at about top of market without at that point moving the price – the Twitter demarche providing cover. May of course is the operative word.
@Scott F.: Delaware Chancery Court is the court of the big players and Musk is not playing with “Little People” here. By precedent if this follows through in actual court battle, Musk will have a rather hard time avoiding break-up fee, although this has rather little to do with any ‘justice’ against billionnaires, but arrangement of capital deck-chairs.
Why the Lefties are seeing this as some Billionnaire versus the Little Guys morality play rather escapes. (the delusional readings of the MAGA are rather easier to understand given Musk’s recent posturing, although perhaps that explains the Left playing the opposite reaction). Two political tribes jumping on fallacious political connexions in this dispute certainly will generate some entertaining if generally ill-informed and empty comment on the Musk-Twitter legal combat.
@Just nutha ignint cracker:
Not to worry. The FED is stepping up to prevent such a disaster. There was a threat there that the labor share of income might rise, but responsible authorities are throttling back the economy. Kind of funny how economists, and the FED, will argue that price increases per se aren’t inflation, but increasing the price of labor is.
@Michael Cain: Rubbish. Had Musk not waived DD, Twitter could have some points to worry about, but Musk did waive DD. Established precedent rather puts Musk on the back foot regardless of Twitter’s failings. That said, in a rational process, a settlement around break-up fee or perhaps a deep discount acquisition would normally be what one should except, after some reasonably expensive legal exchanges. Muskian impulsiveness and deep pockets however put some decent doubt on this – although in capital markets the general wisdom has been we’d end up right here…
@gVOR08: It would be funny if indeed actual central bank and proper economists argued such things… but they don’t, that’s an innumerate Lefty pretence.
Boggling however to see the Left replicating it’s self-delusions from the 1970s… substantively the same arguments, the same hand waiving with rather little change.
For the actual legal you can profitably read The Financial Times
FT May 22 comment in re deal and today’s note to much the same effect.
Although generally making the error of thinking about and understanding Musk vs Twitter via political lens is to be rather like the MAGA dupes.
(although FT Alphaville blog is rather more fun to read on this, as: https://www.ft.com/content/078c8ee4-30bc-47b3-82f0-b232e7810e9c and https://www.ft.com/content/d204d339-4e3b-41a8-baf2-151d799f3afe)
@Lounsbury:
Oh, please. Because we all know central bankers are the true arbiters of what constitutes proper economics.
Just say what you really mean: that you consider any economist who dare question the operating assumptions of the profession improper not because they are right or wrong, but because it might disturb your own position.
It doesn’t even require Piketty to be correct in his views for your comment to be stupid.
Next you’re going to tell us that Marxism is an ideology, but Capitalism is proper natural philosophy. Some of us prefer to avoid self-delusion even at the risk of discomfort.
@Michael Reynolds:
Assume EVs are going to dominate the next generation of car purchases — we’re not there yet, but things are pointing that way.
Musk has made Tesla the preferred brand among Bros. He’s carved out a market segment that Ford and Toyota didn’t even realize exists. And he’s been expanding it — it had been mostly very wealthy tech folks, than TechBros (losing a lot of the folks, but getting a larger number as the cost went down and the willingness to pay went up) and now he’s expanding to DoucheBros in general.
The number of Teslas in Seattle keeps increasing, and they aren’t being driven by the best people.
There’s a cap on the DoucheBro segment of the market, but it hasn’t been reached.
(One of the folks in my HOA has a Tesla, he’s the one who keeps asking about dissolving the HOA… Our HOA is five people and exists to get lower costs on insurance for the building. It sporadically acts as an entity for contracting roof cleaning — but only with unanimous consent, as that’s outside the charter. Bro can’t get past “HOAs are bad” to look at what this particular HOA is)
@Kurtz: Leftie ideological knee jerking is boringly predictably wrong and tediously strawmanning, as ideologically driven comment normally is.
Of proper economists, you can consult the normally Leftie adored Paul Krugman on inflation, and how real economists speak to inflation and analysis of the same, not Left innumerates fun house mirror distortion and imagining. Hint, fun house mirror strawman is wrong and some combination of mere ignorance and misunderstanding added to ideological closure. Labour centric analysis is a thing of the Left and Marxist simpled mindedness. What CBs and non loon economists are following is a complex series of supply shocks downwards with sustained constraints, with a juicing of demand via Government transfers on an unprecedented global basis including developing markets. While contrary to the ideologues on the Right, consensus is those supports at the time were worth the bet, equally broad data driven consensus is there is major overshoot driving now structural inflationary price increases as primary constraints feed through supply chains, and wage pressure decoupling in ways quite reminiscent of early 1970s, although of course not identical. And continued pricing pressure in B2B as well as consumer, which of course feeds labour side. Ergo demand needs to be cooled or one is doing an updated rerun of the 1970s policy errors.
It’s a matter of rather impoverished thinking and understanding to trot out the bizarre sally that Central Banks set any such thing being as they are rather followers.
Piketty, and his economic historical work,has rather nothing to do with comment I made although highlights an innumerate political understanding …
Marxism by the way is an ideology, Capitalism simply isn’t in itself being at origin Marxist descriptor of private capital accumulation, though there are political ideologies of course that take up “capitalism” as a flag. Classic liberalism and American Libertarianism being two of course. Marxist mirroring and self confusion aside,
@Scott F.:
I actually think the opposite: Delaware’s reputation as the place you want to incorporate your company is partially based on the knowledge that contracts will be enforced. Musk may be rich, but he’s a small fish compared to the banks that are about to make an example of him for shaking the table their M&A game is being played on
@Stormy Dragon:
A lot of people are giggling about the Delaware Court of Chancery’s name, but it’s kinda like the US Postal Inspectors, where the general public scoffs, but the people who know about them know they’re one of those organizations you don’t mess around with.
And the guy whose posting on a site that blocks posts about the insurrection.
https://news.yahoo.com/trump-truth-social-banning-users-164736257.html
@Lounsbury:
Here’s the Clerveland Fed arguing such things.
@Kurtz:
If I could, I’d upvote this twice.
@gVOR08: It does no such thing, although this is an example of your ignorance and incomprehension of the article that you think this is an example. The 2008 article is merely a descriptive defence of 2008 policy (which one can note were inflation-fear dovish).
@Stormy Dragon: Why would anyone giggle over the name?
@Lounsbury: You’ve made me reconsider my position. It not just the assholes who are powerful for whom I wish comeuppance. Sanctimonious blog commenters should get theirs as well.
@Stormy Dragon: I hope you are correct about how this will play out in Delaware, but you’ll excuse me if I wait for the final results.
@Scott F.: StDr is perfectly 100 percent correct as this is not a morality play legal battle, it is an acquisition contracts legal battle, and Chancery court is not some rube backwater. Nor is Musk up against little guys or drab SEC civil servant lawyers (why the Left here cares if Musk pays over to Twitter and then largely to other capitalist owners who you also largely hate rather escapes). Musk’s 420 twittering on the deal transparently casthing about for a way out also made his position materially harder.
The only persons with upsides on this are the M&A litigators, whose next several years of billables are indeed met- and probably a fine set of paralegals and tech advisors also who get to bill like crazy.
Everyone else should merely shrug.
@Michael Cain:
I bit for bit copy +10 terabytes of data a week as backup for my personal machines in my house. Standard operating procedure at my last IT job was to copy over a master ISO to every new machine. We’re talking up to 300 desktops/laptops at a time. I’m genuinely curious how your group managed to generate so much data on each personal workstation that making a backup was impractical.
@Lounsbury:
Perhaps it is my fault, but I don’t think you quite understand what my criticism is.
Economics and politics cannot be meaningfully separated on a broad basis. If, for example, a sociologist made the claim that its inquiry is inherently more scientific* than economics, you would (rightfully, in substance, if not tone) mock them. But you make the same mistake. Fcygg
To put it less charitably, ‘proper economics’ vshk dgrimis no different from sociology, political science, or anthropology except it has had better marketing for the last 100+ years. Yet another mean way to put it would be, if an economist only has one arm, they are lying or full of shit.**
Ideologists think they are speaking objective truth and any opposition is merely engaging in ideologically motivated thinking. This is my direct criticism of your view. And I think your response to me provides ample evidence of its validity.
I’m quite sure Brian Greene would swear up and down that he is doing proper physics. But Woit begs to differ. I’m with Woit. In this view, academic physics departments are engaging in ideology, not science.
*That is to say: objective or finding natural laws akin to finding invariable proofs of how entities interact.
**There is a difference.
@EddieinCA: I think you can just open it in an incognito window, or another device.
@Lounsbury:
Fun Fact: This is why I never read your posts beyond the first sentence or so, and just let them wash over me visually as I scroll past. Sometimes there’s an amusing butchery of the English language that leaps out.
I’m half convinced you’re Tyrell, playing a new character.
Last summer at Target I saw a shirt. Bought it.
When you go to Target you walk in with a curated list and the will to limit it to 50 bucks. You walk out dazed 45 minutes later, a full cart, and 200 bucks poorer. Is it the shitty overhead lighting? Maybe the nonsensical aisle lay-out? There is something in the air. They pump the store full of “buy random shit” chemicals, I swear.
When I got home and looked at it and thought about it, and why the fuck did I buy that shirt? It’s stupid. I am not going to wear that in public. What the fuck was I thinking?
If I were Elon Musk I would sue Target for making me buy it on impulse. I am a sane person and not an asshole (hopefully on both counts). I could take it back unworn to Target for a refund. Some extremely bored clerk would ask me why and I would feel duty bound to answer truthfully. “I’m kind of a ‘I don’t give a shit’ person, but I have standards and a threshold. This shirt, were I to wear it in public, would send out a message I’m comfortable with. It does not fit my personal style.” That transaction is not going to happen. I’d give it to Goodwill first.
Some people could do that. I can’t. I don’t do returns. I eat my screw ups. It would be rude to demand money back.
Musk does do returns. Well, he tells a lackey to tell a lackey to go to Target for a refund on the shirt he decided not to buy afterall. “Money back, please.”
The stupid shirt I disliked when I got home works fine as a pajama top. If I’m asleep I don’t care. Besides, it was like $15, not worth the time or effort.
Musk is an asshole. Zuckerberg actually had an insight – people are data and that data can be sold or leveraged. Creepy insight, but smart. Bezos built actual useful shit and infrastructure. Delivers stuff I want to my door in a timely fashion. Underpays and overworks his peasants, but he does what a Capitalist does.
What is surprising me is that Twitter is trying to push forward for the acquisition rather than taking the $1B. Which makes me think they know there’s something stinky under the bedclothes and they’re trying to shove off the whole thing on Some Other Poor Sap and then vamoose.
Of course, there is the fact that the acquisition price was set to be far higher than present stock price….has anyone done a back-of-the-envelope calculation to see whether the discrepancy between present stock price and acquisition price on issued stock adds up to be more than $1B? Because if it’s less than $1B, I would think stockholders would be happier for Twitter to take the $1B cancellation fee and run.
I’m also going to be interested to see what Tesla stock prices will be doing as other auto companies ramp up their own autonomous vehicle projects. Tesla has made some engineering decisions that I would argue open them to liability and I wouldn’t be surprised if those come home to roost at some point.
@grumpy realist: the delta is way more than $1B. The muskrat was offering an above market rate, and then stocks began dropping across the board.
Pushing for him to do the purchase also may be a negotiating tactic to get the full $1B, rather than fighting over it.
Any truth to the rumor Musk is going to buy Social Truth and rename it Qwitter?
@Gustopher: FTR, I am pretty sure Lounsbury could never be Tyrell. His ego could never withstand being such a dumb ass. Always always always he has to be the smartest guy in the room/blog. Especially when he isn’t.
FTR, if I had to guess it would be Drew.
@Gustopher: Damn it to hell, the unpredictable edit function!!!
@grumpy realist:
The company has a negative operating income and no real way back to positive cashflow. So yes, if the investors can get Musk to overpay them for it, they would very much like to unload it before they run out of money.
ie. they found a sucker and they aren’t about to let him off the hook. (nothing stinky… other than the sucker who bid way more than they are worth)
He’s becoming a self-sired Icarus. Flying too high will be the end if him..unless he’s smart enough limit himself.
@grumpy realist:
Let’s do that right now:
St. Elon offered $54.20 per share, and the deal was reported to be valued at $44 billion. So, 44 billion divided by 54.20 yields 801,111,118.0811 shares. Let’s round it down to 801.1 million shares.
Twitter stock closed on July 8 at $36.81. So 36.81 times 801.1 million is $29,488,491,000. Let’s round that up to $29.5 billion.
$44 billion – $29.5 billion = 14,500,000,000 or $14.5 billion.
Finally, $14.5 billion > $1 billion.
But Musk if backing off, not trying to renegotiate the price to, say $40-$45 per share. It may not be about money, but more of a loss of enthusiasm. Or it may be he expects to be able to get a lower price in court, or any other reason I can’t think about or don’t even know about.
@de stijl: I never have the problem you describe when I go to Target. Then again, I only buy liquor there.
@Gustopher:
“I’m half convinced you’re Tyrell, playing a new character.”
I strongly doubt that, as I have seen Lounsbury on various sites for nearly 20 years, far longer than I have seen Tyrell.
@Gustopher: @OzarkHillbilly:
As amusing as that may be, no way. Tyrell and Drew are more run-of-the-mill.
Lounsbury is more like this.
@Gustopher: I’d swear he’s being paid by the word based on how he writes. It reminds me of posts back in the day on various internets where a person is trying too hard to appear as intelligent as possible by exhibiting their ability to be overly verbose about everything. It’s also a trolling tactic. So who knows. Lounsbury is generally well educated about subjects. Even if I disagree with his conclusions sometimes. Lately I find myself mostly outright skipping their posts because of their excessively wordy nature (I do skim sometimes depending on the subject).
@Kurtz: I understood perfectly well. Rather you do not understand what I wrote, as is the habit here about comments not falling within the Lefty group-think – proper economists being people trained in economics and not fringe maunderers. As I pointed you to Krugman – a proper economist, on the Left, and indeed doesn’t agree with my view on inflation. However you can see from him what proper economists look at in inflation analysis.
So the very oppositive of motivated thinking and ideology. I merely happen to actually know and read proper economists and Central Bank analyses of inflation and the innumerate ideological pretence on “labour share of income” being something that Central Bankers and economists particuarly care about in respect to inflation is nothing more than a ideological strawman (of the quality the MAGA heads usually use).
@Moosebreath: I was also at one point if my memory is right on the OBW blog roll when I was a blogger (or got cross-cited, how I found this place, memory is hazy, has been decades since I abandoned blogging).
One of the sadder and more pathetic habits of the echo chambre amongst the ideological, disagreement must mean Troll – a year ago as I recall I was a Russian Troll…. for all that I have commented here rather longer on and off than most of the Left readership have been here.
However, the ideological reaction can flip now, the Orange Cretin has flipped to attacking the dear Musk.
@grumpy realist: There is nothing surprising about this – it is not politics and understanding this via politics is the path non-understanding.
The Twitter Board is obliged to pursue as first the Musk offer is by the far the best Twitter shareholders will see, probably ever. As such they have a duty to pursue available legal avenues to recover value. And since the acquisition agreement, including Musk’s insane and ill-considered waiver of Due Diligence, gives them the legal advantage, a rather strong one even if one grants most if not all of Musk’s claims, they must of they will themselves be sued. They stand a decent chance of either extracting the break-up billions, or achieving the acquisition even if at a downgraded price, still better than their market price. Of course Musk may well be playing for a negotiated settlement that is still acquisition…
@Lounsbury:
One thing is for certain: accusing your interlocutors of “Lefty group-think” is a sure avenue of persuasion.