That'll be the official, legal remedy; what seems most likely is that once Twitter obtains that remedy, they'll settle with Musk, who will in fact pay damages.

Why would Twitter settle with Musk after they win specific performance in court?

(Warning: speculation)

Because a sentence and how it is carried out are two (sometimes wildly) different things. Musk could lose the case and still drag the actual execution of his obligations for years.

Levine pointed out yesterday that some of the agreements Musk has in place to fund this operation will expire on April 2023, so he could wait until that date and say "whoops, I can't afford it now". I have no idea if that would stick but this case has been unusual since day zero.

The most important thing for Twitter is to get out of this mess, honestly, the sooner the better.

>The most important thing for Twitter is to get out of this mess, honestly, the sooner the better.

On the contrary I think the most important thing for Twitter is to get $54/share for its shareholders, and liquidate. There is no alternative path with an exit anywhere near $54/share.

I believe something around $30b of the $44b is backed personally by Musk

Basically all of Musks "money" is in the US, and much of it is even in Delaware Corporations. The judge can very easily extract whatever it takes from Musk if it comes to that.

It goes like this:

* 13B from a party of banks (i.e. Morgan Stanley and friends), in exchange for who knows what (private equity?)

* 12.5B from pretty much the same party of banks but as a loan that takes Musk's TSLA stock as collateral

* 21B from Musk itself (idk under what conditions)

So he could easily "not afford it" if he wanted to.

That's how he planned to finance it, but I don't see why a court would limit itself to those assets.

Unless his net worth drops by about 75%, he can afford it.

>but I don't see why a court would limit itself to those assets

If the court rules "the deal has to go forward" I don't see why other assets would be considered.

Also,

Net worth != seizable property.

Also,

Net worth >> real net worth > realizable assets > seizable assets.

To be honest, if Musk were ordered to pay the $44B today, out of his pocket, I don't think he would be able to.

All I'm saying is, even if Twitter wins (which I think they will, in the very long end), there's a long road between that decision and having the actual money (or stock or w/e) land in their hands.

On top of that, there's no way Musk could go to jail because of this (it'd be very hard to prove there was wrongdoing behind this), so there really is no pressure on him to pay the $44B, he could drag this on foreeeeveeeeeerrrr ...

Stocks of a corporation incorporated in the US are completely seizeable.

If he won't cooperate, he could be jailed for contempt (they don't need to prove wrongdoing during the deal, disobeying a court order is itself enough). They could also probably just send a court order to his stock broker.

Fair enough, I think you are right on that.

AFAIK, there are two separate deals here, one between Twitter and Musk and one between a collection of banks and Musk. Musk didn’t make the first deal contingent on getting the second one.

Having that second deal in place convinced the Twitter board that Musk had the money and the liquidity to pay the amount he offered for Twitter, but otherwise that deal is irrelevant for this case.

Courts take a real dim view of that kind of game. When a billionaire "can't afford" to pay a court judgment, the courts don't just shrug and say "stuff happens". They know when they're being played, and they can play back a lot harder than Musk can.

Apparently he changed his financing breakdown on 2022-05-25 [0], so as of now it's $13 billion from banks and the rest himself as far as I know.

[0]: https://www.bloomberg.com/opinion/articles/2022-05-26/elon-c... (paywall bypass at https://archive.ph/e95rj)

Because they'll get both money and Twitter's assets, and there is some number between $1B and $44B where Twitter will be happy to have both. Twitter isn't worth $44B right now, but, contra message board takes, it's also not worth close to $0.

To prevent ownership by someone who doesn't want to own you. That leads to ruin.

This is the board and shareholders. They wouldn’t be ”you” anymore after they sell. Why would they care about what happens to Twitter after they’ve gotten their money?

My thesis is that while $1B isn't enough for Twitter to walk away, there are likely enough shareholders who want the enterprise to continue after taking a settlement (between $1B and $44B) due to ongoing value creation that a settlement is more likely. Could shareholders be satisfied to take $44B to then incinerate Twitter with Musk owning it privately? I suppose that is possible, but doesn't feel like the narrative from majority shareholders (based on what was public during earlier events). People and motives are tricky!

This is a total buyout. There is no “you” left after the deal. Total liquidation of all shareholders.

That would lead to more shareholder lawsuits. The $54.20 cash deal is like a golden carrot on a stick, seeing what happened to Snap and the cloudy economic outlook means they would tank in value if Musk sells his shares. They have no choice but to accept it.

I could imagine them settling on Musk paying a penalty of the difference between $54.20 and the current price, and then immediately distributing that penalty to each shareholder (including Musk!). Or maybe a smaller penalty in combination with Musk forfeiting his current shares which would be a kind of “buyback” to help make the shareholders whole.

If the payout would be substantial, it would be dumb for Musk team not accept and buy Twitter at that point and do a later IPO at a new price after restructuring. There’s not much for Musk to loose by playing it out like this. In the end they buy it, they don’t, or they settle before then. Paying a large fine is in neither sides best interest. Twitter shareholders have to get the best result : anything less than $50/share would likely be a nonstarter if closing remains an option.

To avoid a long appeals process. After the 2010 Deepwater Horizon oil spill, BP dragged the legal process out for over five years.

And this dispute, while involving similar amounts of money, doesn't seem to have the same moral urgency to speed it along.

Completely different type of lawsuit, and in a completely different court. There is decades of precedence here. It takes doesn’t take long to decide these cases, and the appeals are quick. This will all be over before the end of the year.

It is highly likely that Musk's financing will pull out if they haven't already. The market is down so the value of his existing wealth has dropped. Musk may not have the resources to close the deal. If they force him into bankruptcy they aren't going to get $44b.

They might have a number in mind that they're aiming for to back away - say $10b. They might also have him agree not to start a potential competitor for 10 years.

On the flip side they might think the markets will remain down for some time and the premium price is worth going full scorched earth on Musk. In that case he'll have to eat some punitive financing costs or file bankruptcy - most likely the latter because I can't see him giving up his stake in Tesla and SpaceX.

The financing is already committed, the banks don't have any more right break a contract for convenience than Musk or Twitter do.

> If they force him into bankruptcy they aren't going to get $44b.

Why not? He appears to still have the non-financed amount well covered by his Tesla, SpaceX, and other assets. Even if markets implode much further they'll still be able to recoup much more than the $1B cost Musk is hoping to get away with.

If the financing pulls out, the acquisition is canceled and there's a $1 billion termination fee.

As described above, if the conditions to Parent’s and Acquisition Sub’s obligations to complete the Merger are satisfied and Parent fails to consummate the Merger as required pursuant to the Merger Agreement, including because the equity, debt and/or margin loan financing is not funded, Parent will be required to pay Twitter a termination fee of $1.0 billion.

Good deal for shareholders right? Don't give up ownership of Twitter and net 10-15 Billion $ for free

It might turn out to be a good deal for the shareholders, but good lord, I would not want to be one of the Twitter board members who agrees to a settlement offer. This guy owes your shareholders $44 billion! And you’re going to take less than that?!

Now, that said, there are likely to be good commercial, legal and practical reasons for them to settle this case, even if they win on specific performance. But the optics are terrible for Twitter’s board, and they’re all gonna get raked over the coals in the forthcoming shareholder litigation (which in inevitable regardless of how this winds up playing out).

That seems a little skewed. Musk owes $X billion, and _gets the company_.

If Musk gives some smaller amount of money, though still several billion, but the shareholders still own the company, that's not going to be too hard to sell as a win.

The amount would have to be close to the difference between the price he would pay and the current value of the company, at which point Musk might as well go through with it, if he really thinks he can run it better.

Seems like there's probably some number in the middle that should satisfy both sides, since Musk really seems like he doesn't want to own Twitter now, apparently. I guess we'll see. Anyway though, I personally don't see it as being that hard to defend pretty much any probable outcome, as the Twitter board.

The Twitter board agreed to sell the company, for cash, for $44 billion. Without overcomplicating things too much, it’s not actually the case that a Delaware corporation must maximize the value to the shareholders in every circumstance … except for this one, in which they - having agreed to put the company up for sale - must maximize shareholder value.

So to the extent Twitter is currently worth less than $44 billion and there’s a binding merger agreement that delivers $44 billion of value to the shareholders, the board has to do something to bridge that gap. A billion-dollar break fee ain’t gonna cut it. But sure, if at the end of the day the shareholders can retain ownership of Twitter, Inc. worth $25 billion (and the value of the company hasn’t been irreversibly impaired by this circus) and extract a $20 billion settlement from the acquirer, then were I a Twitter board member, I wouldn’t feel too worried giving my deposition about that outcome.

Still not a great look for anyone though.

Not necessarily compared to netting $44bn, though. I guess it depends on how long they think it’ll take for Twitter to reach that price again, if ever.