So this April, Musk announced that he wanted to buy Twitter Inc. Why not? Musk seems to get a lot of joy out of using Twitter, and pretending to buy Twitter is a good way to create drama on Twitter. At the time, I assumed that, as with Tesla, he was doing a bit. “Ordinarily,” I wrote, “if a billionaire chief executive officer of a public company offers to buy a company, the odds that he is kidding are quite low. When it’s Elon Musk, the historical odds are, like, 50/50.”
But he surprised me by quickly lining up financing (paying millions of dollars of fees to banks for commitment letters) and signing a merger agreement with Twitter. If he was pretending he was going to buy Twitter, those were pretty elaborate lengths to go to? But he frequently goes to elaborate (and expensive) lengths for a joke — he sold 20,000 branded flamethrowers to make a joke about flamethrowers, and also founded Boring Co. to make a joke (???) about tunnels — so who knows. Would he line up billions of dollars of financing and sign a binding merger agreement with a specific-performance clause and a $1 billion breakup fee as a joke? I mean! Nobody else would! But he might! [...]
Still, one should remain open to the possibility that he was kidding when he first signed the deal. “Elon Musk had a well-thought-out business and financial plan for Twitter that worked in the economic conditions of early April 2022, but conditions have changed and the model no longer works” does not strike me as the most plausible description of what is going on here. “Elon Musk whimsically thought it might be fun to own Twitter, so he signed a merger agreement without taking it too seriously and then lost interest a week later” feels more true to the situation. My first reaction to his proposal to buy Twitter, that it was a joke, may have been the correct one. He was just a lot more committed to the bit than I expected.
I am so tired of this whole bizarre saga but I seemingly will never tire of Levine’s entertaining and insightful coverage of it. Here’s just one interesting thought from a column full of them:
The fact that Musk is working in such bad faith here — that he seems so unconcerned with law and the contract he signed — cuts both ways. On the one hand, it will certainly annoy a Delaware chancellor; Delaware likes to think of itself as a stable place for corporate deals, with predictable law and binding contracts, and Musk’s antics undermine that. On the other hand it might intimidate a Delaware chancellor: What if the court orders Musk to close the deal and he says no? They’re not gonna put him in Chancery jail. The guy is pretty contemptuous of legal authority; he thinks he is above the law and he might be right. A showdown between Musk and a judge might undermine Delaware corporate law more than letting him weasel out of the deal would.