Re:Musk Says Twitter Must Prove Bot Claims for $44B Deal to ...
by helsinkiandrew on Tuesday May 17, 2022 @08:52AM
(#31409776)
Mike Lynch was involved in a "multibillion dollar accounting cover-up". Musk can walk away if Twitter’s securities filings are wrong but only if that would lead to a “Material Adverse Effect” on the company:
> Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No.
> Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No.
https://www.bloomberg.com/opinion/articles/2022-05-13/elon-m...