Elon Musk and Twitter Reach Deal for Sale (1 Viewer)

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    SaintForLife

    SaintForLife

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    Elon Musk struck a deal on Monday to buy Twitter for roughly $44 billion, in a victory by the world’s richest man to take over the influential social network frequented by world leaders, celebrities and cultural trendsetters.

    Twitter agreed to sell itself to Mr. Musk for $54.20 a share, a 38 percent premium over the company’s share price this month before he revealed he was the firm’s single largest shareholder. It would be the largest deal to take a company private — something Mr. Musk has said he will do with Twitter — in at least two decades, according to data compiled by Dealogic.

    “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Mr. Musk said in a statement announcing the deal. “Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.”

    The deal, which has been unanimously approved by Twitter’s board, is expected to close this year, subject to a vote of Twitter shareholders and certain regulatory approvals.

    The blockbuster agreement caps what had seemed an improbable attempt by the famously mercurial Mr. Musk, 50, to buy the social media company — and immediately raises questions about what he will do with the platform and how his actions will affect online speech globally.
    www-nytimes-com.cdn.ampproject.org

    Elon Musk and Twitter Reach Deal for Sale

    Twitter agreed to be taken over at $54.20 a share, a 38 percent premium over the share price before it was revealed that Mr. Musk had been buying up the company’s stock.
    www-nytimes-com.cdn.ampproject.org www-nytimes-com.cdn.ampproject.org



    If Musk does what he claims he wants to do it will be a big improvement and good for free speech.
     
    Even though he waived due diligence, the 5% representation was made by Twitter in its SEC filings - which are public and I think Musk will argue that he relied on that number when coming to his price calculation. I think in theory it's a viable position to claim that you're learning that the public filings you relied upon are inaccurate - and that doesn't fall under due diligence. At least from what I can gather, I don't do M&A either. But under this rule, the inaccurate information in the public filing has to result in a 'material adverse effect' on the company for the buyer.

    I don't think Musk's argument is a very good one. First, Twitter never said the 5% was a firm, reliable ceiling of spam/bot accounts. The company has explained in the past and recently that it engages in daily and quarterly efforts eliminate accounts that are not genuine users - and based on its process to estimate "daily active users" (which is different than total accounts), it believes the number is 5% or less. This is a fairly fuzzy definition and I suspect that the compliance folks at Twitter are confident that they can demonstrate it to be true under their own definition.

    Second, Musk hasn't revealed why this would be new information for him. He has always said there are too many spam/bot accounts - he even said that's one of the reasons why he wants to buy to company (to get rid of them). I suspect that because he's the world's richest man and a twitter account with hundreds of millions of followers, he probably see a lot more spam and bots than most of us do in our daily use of Twitter, but if his position is that Twitter's 5% number is misleading, he already knew that. He's claiming he can show it to be misleading by doing a simple sampling of activity on Twitter, but he could have done that before - it's not like he's saying he "learned" new information after the purchase agreement that is now making him question it. He always questioned it. And I don't think Twitter has to "prove" anything - only explain their methodology.

    Finally, it would be really hard for him to argue a material adverse effect on Twitter's value. Twitter's revenue comes from advertising and advertisers pay to get on Twitter where hundreds of millions of tweets post every day - they're not going away if someone reveals that Twitter's SEC filing about spam accounts was misleading. This isn't like where a company said they had a contract they didn't have or said they owned IP they didn't own . . . stuff like that has a material adverse effect on the value of the company to the purchaser. I don't see how Twitter's spam/bot ratio does.

    I think it's obviously a ploy. Whether its based on change in market conditions or some other element of his intent, I don't think the bot issue is really what's going on with Musk.
     
    Okay so what the hell is this? Musk appears to he agreeing that his plan was not to buy twitter but to expose twitter’s alleged deception about spam/bot accounts. There are rules about making negative public statements about the acquisition target during this period - Musk is walking a dangerous line here, but I doubt he cares.

     
    el caliente said:
    So he is going to eat $1b to expose Twitter.

    To have that kind of walking around cash.
    Click to expand...

    Could be more than that, Twitter likely has a breach of contract claim based on his conduct if he walks.

    But I’m not seeing how it exposes anything. Critics have long said it’s a problem and Twitter has acknowledged it, and since 2018 has been executing a plan that better controls new accounts and purges existing accounts. What’s being exposed here? I’m sure there are many different ways to try to put a number on ratio of bad accounts. Unless twitter’s own methodology doesn’t yield the number they claim (in other words a patent lie), then there’s no wrongdoing, just a difference in analytics. I don’t think it’s likely that the company is actually lying. They may have come up with a methodology that’s favorable to their position but that’s not a lie - there’s no regulatory or industry standard on how to define that.
     
    Ultimately it doesn’t matter how you or I view the transaction, we are neither the buyer or the seller (or their teams of attorneys, or the ibank working on the deal). If there is something there that we aren’t aware of regarding bots, etc. it must be enough for the buyer to want to back out.

    I think ultimately Twitter is giving Musk enough rope to hang himself with. While a massive pay day would be nice for them, collecting $1b for letting someone check out the back office is pretty smart.
     
    el caliente said:
    Ultimately it doesn’t matter how you or I view the transaction, we are neither the buyer or the seller (or their teams of attorneys, or the ibank working on the deal). If there is something there that we aren’t aware of regarding bots, etc. it must be enough for the buyer to want to back out.

    I think ultimately Twitter is giving Musk enough rope to hang himself with. While a massive pay day would be nice for them, collecting $1b for letting someone check out the back office is pretty smart.
    Click to expand...

    Maybe there's something there that we aren't aware of or maybe it's just a ploy for Musk to back out of a deal (or re-negotiate a deal) that doesn't look as good as it did when it started . . . market conditions have changed quite a bit. Or maybe it's just a deal that many observers believe may not have been his intention in the first place - he seemed to be okay with that characterization.
     
    superchuck500 said:
    Maybe there's something there that we aren't aware of or maybe it's just a ploy for Musk to back out of a deal (or re-negotiate a deal) that doesn't look as good as it did when it started . . . market conditions have changed quite a bit. Or maybe it's just a deal that many observers believe may not have been his intention in the first place - he seemed to be okay with that characterization.
    Click to expand...
    The main thing I’m seeing illustrated here (again, as if Trump hasn’t illustrated this enough) is that the rich don’t have to follow the same laws and rules as the rest of us. They can do fraud with impunity, and nobody will hold them accountable. Not in the least.
     
    MT15 said:
    The main thing I’m seeing illustrated here (again, as if Trump hasn’t illustrated this enough) is that the rich don’t have to follow the same laws and rules as the rest of us. They can do fraud with impunity, and nobody will hold them accountable. Not in the least.
    Click to expand...

    What fraud are you referring to?
     
    Didn’t we just go through the Maxwell trial, and nobody of note was exposed from it? It’s not fraud, but it certainly is odd.
     
    superchuck500 said:
    Could be more than that, Twitter likely has a breach of contract claim based on his conduct if he walks.

    But I’m not seeing how it exposes anything. Critics have long said it’s a problem and Twitter has acknowledged it, and since 2018 has been executing a plan that better controls new accounts and purges existing accounts. What’s being exposed here? I’m sure there are many different ways to try to put a number on ratio of bad accounts. Unless twitter’s own methodology doesn’t yield the number they claim (in other words a patent lie), then there’s no wrongdoing, just a difference in analytics. I don’t think it’s likely that the company is actually lying. They may have come up with a methodology that’s favorable to their position but that’s not a lie - there’s no regulatory or industry standard on how to define that.
    Click to expand...
    I'd add that the methodology Twitter laid out also seems sound and relevant. According to them, they assess 'monetizable daily active users', by sampling thousands of accounts, at random, over time, every quarter, for years, and having humans reviewing those accounts using both public and private data (where Parag Agrawal gave 'IP address, phone number, geolocation, client/browser signatures, what the account does when it’s active' as examples of private data). That's crucial, because that data can be the difference between determining whether an account is a real person's account that, for example, copied and pasted a post, or a real person's account that's recently been compromised (which could be seen in a change of IP, client, and behaviour), or part of a bot farm that's attempting to give the appearance of real accounts. Just looking at the accounts without that data could easily give highly inaccurate results. All in all, that seems a sound approach - significantly sized random samples of relevant data, sampled consistently over time, and assessed with a defined process using all pertinent data.

    Whereas Musk's notion that he could have "my team" "do a random sample of 100 followers of @twitter" and getting "others to repeat the same process" and come up with something useful? No. That doesn't make much sense at all. Even putting aside leading bias, 100 is a small sample, the lack of private data makes it much harder to accurately distinguish between spam and real accounts, there isn't even a defined process there - ' do a random sample' is not a process - for anyone to repeat, and 'followers of @twitter' is not necessarily representative of users of twitter, let alone active users of twitter since it'll include accounts that haven't been active for years.

    Which is also why the stupidest response from Musk to Agrawal's twitter thread wasn't even the poop emoji. It was saying, "So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter." Because, first, Agrawal just laid out exactly how they know, in the thread Musk was responding to, and secondly, Musk's proposed method would be largely useless in that regard. Advertisers care about the users that are active when they're advertising, not users that were active once and followed @twitter at some point in the last 15 years.

    I haven't really paid much attention to Musk previously, but I'm getting the distinct impression he's not the brightest bulb in the mansion.
     

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