[suzzer99]

Do they always have the option of settling at any point in the process? Like if Musk said "$20 billion penalty but I don't buy the company", I assume they'd say yes? (Or substitute a bigger number if not.)

So are they just negotiating at this point if Musk has a penalty number he's willing to pay?

[ergocoder]

My bet is on this.

They will just negotiate. Nobody wants to go through a lengthy legal process.

I think the number will be at 5b. Because, at 5b, Twitter gets a 1y revenue for virtually no cost. Twitter doesn't want to sell to a buyer who doesn't actually want to buy. It's not good for anyone.

Imagine Musk buying Twitter and starting open up exec emails knowing about the bot numbers being inaccurate.

[kllrnohj]

At $5bn Twitter & its board open themselves up to getting sued by the shareholders who were harmed for $16bn currently.

What Twitter as a company "wants" is kinda irrelevant. They have a fiduciary responsibility to their shareholders, and telling all those shareholders they just didn't feel like getting a $54.20/share deal because they didn't like the buyer and didn't want to be bought isn't really going to fly.

So any settlement will come with a requirement for Twitter to reasonable demonstrate to share holders that they haven't been harmed. And since all signs point to Twitter having the much stronger case, it's hard to imagine them just accepting much less than either the original purchase, or a penalty fee of closer to $16bn (the current gap between the share price & the purchase price)

[colinmhayes]

The state of Delaware has consistently given boards wide discretion to act as they see fit in their fiduciary duty. Unless stock holders can prove the board acted in bad faith it will be very hard to win a case against them.

[RandomBK]

>consistently given boards wide discretion to act as they see fit in their fiduciary duty

That discretion is highly limited in the context of an acquisition, where there's a high risk of conflicts of interest between the Board and Shareholders. Delaware courts have consistently limited the Business Judgement Rule in takeover situations.

[nabla9]

> Twitter gets a 1y revenue for virtually no cost.

This is not between Twitter and Musk. This is between Twitter shareholders and Musk. Twitter board is just working on their behalf. Shareholders don't care about Twitter's future now when they have very tight agreement. There will be judgement against Musk almost certainly.

Musk made $44B deal. However this ends, Musk is in hook for tens of billions. Either he pays $44B and gets Twitter or he pays the difference between $44B and current valuation when the deal is made, say $20B and current owners keep Twitter.

Musk has no upper hand. He made a huge mistake.

[eloff]

I think the best he can hope for here is settle the lawsuit that will follow for buying twitter at a slightly reduced price.

The amount he would pay to walk away is roughly equal to the current fair market value of Twitter. I wouldn't be happy to pay that and get nothing for it. Better to go through with the deal.

[t_mann]

Not sure. Twitter board members have a fiduciary duty towards shareholders. If they accept a lot less than they could get by simply enforcing the rules (at a comparatively negligible cost) because they don't want to look mean, I reckon there's a very high probability that they will get sued by some hedge fund.

[ergocoder]

People keep throwing this word around... yet the board accepted the first offer from Elon with no negotiation. Nobody is suing twitter board for this.

Who does that? Even new grad negotiates their offer...

[pclmulqdq]

People with no other options take their first offer. Negotiating is for people with alternatives.

My guess is that they floated the price to a lot of potential acquirers during the poison pill debacle, then they got nothing higher.

[ergocoder]

New grad with no other offers still negotiate...

Not even negotiating once is just very odd.

[pclmulqdq]

New grads with no offers still try, but their only alternative is "I say no and keep looking." Twitter's board's alternative is "I say no and get sued by shareholders." Negotiation only works if you can walk away, and it's not uncommon in business deals to accept the first offer if it is generous enough.

[ryanbrunner]

> Imagine Musk buying Twitter and starting open up exec emails knowing about the bot numbers being inaccurate.

There's different levels of knowing about inaccuracies.

There's knowing that your methods of determining bots are probably not optimal and the number is most likely undercounted, but it was a good faith albeit imperfect effort.

Then there's knowing that bots are actually some other specific number and suppressing that information.

I think the former is much, much more likely than the latter and wouldn't really be a huge controversy if it leaked.

[ergocoder]

Apart from that, out of 5000 employees, you can bet there is one employee disagreeing in email and that employee's opinion is discarded.

There is at least one person disagreeing on any topic.

It is a risky situation all around.

I reckon that good faith is not enough.

[jonathankoren]

Twitter and Musk already agreed to a 1 billion dollar penalty. He’s trying to get out of it, even though he already waved due diligence.

[cookingrobot]

The $1B scenario doesn’t apply here. He’s on the hook for $44B.

[petesergeant]

Do you have a simple and short explanation for why?

[kgwgk]

The $1bn is in case something else makes the closing impossible (a regulatory decision, for example).

[achow]

Good explanation..

https://news.ycombinator.com/item?id=32027646

[saalweachter]

Because taking a corporation private is a pain in the ass.

Elon Musk signed a contract giving himself essentially no ability to back out, to force Twitter to consider his offer.