He contractually waived the right to call them out on their figure. What Twitter is doing is performative; they're living up to the letter of their covenants in the deal. They don't have to prove anything to Musk. He's on the hook.

He didn’t waive the right to troll them, and that’s what he’s doing. As I said this wasn’t to get out of the deal but to troll them in the court of public opinion.

A very expensive troll for Musk, hopefully.

Not too sure about that one. If a firm deliberately misrepresents anything to a potential buyer/investor we would rightly call that as fraud.

He declined his right to do any due diligence so they couldn't misrepresent anything since they didn't provide anything. Also they didn't want him to buy and did their best to get him to not do that.

> they didn't want him to buy and did their best to get him to not do that.

They didn't want to be the target of a pump and dump. And they didn't want a bunch of distracting rumors from a takeover bid with no financing. As soon as Elon put financing together they said "yes" pretty quickly.

The board doesn't want to sell to Elon at any price, but the shareholders told them their opinion was not very important as Elon's price was higher than anyone thought the company was worth at the time. Now there is no question that price was way too high.

This is false. He declined his right to do any further due diligence based on what facts that presented in the SEC filings. If those facts turn out to be untrue, shareholders can sue Twitter.

Right, he declined to do more due diligence after having done none. Looking at SEC filings is not doing due diligence. It is also not statements Twitter made as part of the deal.

Shareholders can only sue Twitter if those facts are materially false. This is an incredibly high bar that is almost never met.

*inaccurate

;)

The number of bots on Twitter isn’t a condition of closing the deal, though?

IIRC, there was a term that stipulated that Twitter’s SEC reports needed to not contain material misrepresentations. So, he could nix the deal if the number of bots was different than previously disclosed.

> So, he could nix the deal if the number of bots was different than previously disclosed

Not just different but materially and verifiably different.

So the onus would be Musk to produce numbers that are significantly higher and just as accurate if not more than Twitter.

As with many financial market things, Matt Levine’s summaries are great on this. Twitter has been reporting these numbers for many, many years now. The public market has accepted them for many, many years. Elon has been complaining about the bots for maybe as long.

So nothing has changed between Musk making the binding offer and today with regards to bots. He has not suddenly been surprised about some discovery. This is not something that materially changes what he thought Twitter was worth. It’s just another game to distract people.

And also that Elon clearly no longer wants to buy Twitter,at least for the price he proposed, so this is just him trying to find a way out.

This is going to end horribly for Twitter and some sort of slapp on the wrist for Elon.

He’s managed to get to almost cartoonish levels of disregard for the rule of law. Skilfully deploying them to his advantage when needed, but ignoring completely when they’re inconvenient. All seemingly in the knowledge that he’s now beyond any enforcement.

How is that clear? Has he said it?

He's said the deal was off unless he's convinced by Twitter's bot numbers [1], which isn't a condition of the deal, so, yeah basically he's said he doesn't want to buy.

[1] https://twitter.com/elonmusk/status/1526465624326782976

That's not what that Tweet says.

The tweet says he's not moving forward on the deal unless Twitter provides evidence that their monetizable user metric, which is not an estimate of bots, is accurate. Producing that evidence is not a contingency in the deal, so Elon is threatening to fail to perform, i.e. he doesn't want to buy Twitter under the negotiated terms.

He said: "My offer was based on Twitter’s SEC filings being accurate." Which is a valid statement, SEC filings are _required_ to be accurate.

And you've interpreted: "Producing that evidence is not a contingency in the deal". Which doesn't make a whole lot of sense.

He never said he didn't want to buy it under the negotiated terms, he said he wants to be able to _verify_ that what the company says is accurate.

He absolutely cannot do that. The Material Adverse Effect standard in Delaware law is crazy hard to hit. Matt Levine has been writing about this for weeks. In fact, if you go looking, he's been writing about this for years†. 2 years ago: "[under the MAE standard, you] can walk away from the deal, unless the bad stuff is due to, essentially, anything anyone thought of in advance."

Not only have people heard of bots and user validation in advance, but Musk waived his rights to diligence after announcing on Twitter that fixing the bot problem was why he was buying Twitter. He might not just lose this case if it got to court; the Delaware courts might make an example out of him for this.

Matt Levine is to "it's not Materially Adverse" as Ken White is to "it's not RICO".