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by RestlessMind
1319 days ago
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> The deal was always contingent on the confirmation Any citation for that? I thought Elon waived most of the contingencies. > but facts matter true, they do. And the fact here is that Elon backed out of the legal fight and purchased the company. Why do you think that happened? |
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IIRC it's kind of true. Section 7(b)(i) of the merger agreement [0], which is part of the section describing the conditions under which the merger will take place, states:
> each of the representations and warranties of the Company contained in this Agreement (except for the representations and warranties contained in Section 4.2(a) and Section 4.2(b)), without giving effect to any materiality or “Company Material Adverse Effect” qualifications therein, shall be true and correct as of the Closing Date..., except for such failures to be true and correct as would not have a Company Material Adverse Effect
And Section 4.6 of the agreement describes Twitter's representations regarding its SEC documents and financial statements. Among other things, it states:
> As of their respective dates... none of the Company SEC Documents at the time it was filed... contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, or are to be made, not misleading.
At least by my reading (and the general sense I got from more knowledgeable commentators), this basically means that Twitter represents that its SEC filings contain no material inaccuracies, and that the merger shall take place unless those filings contain inaccuracies significant enough to cause a Company Material Adverse Effect.
So in one sense, the deal depends on Twitter's numbers being not too inaccurate - if Musk could prove that Twitter's numbers were wrong and that that inaccuracy was enough to cause a MAE, then he would be able to back out of the deal.
What is incorrect, though, is the implication that the deal could not go forward until Musk checked Twitter's numbers. The deal basically assumes Twitter's numbers are correct, with the default action being that the merger will happen. The onus was on Musk to prove Twitter's numbers incorrect to the point that it will cause a MAE; otherwise, he must go through with the deal. Proving a MAE is an incredibly high bar - from what I've seen from other commentators, a MAE has been found once in the entirety of Delaware's corporate legal history, and given how Musk's evidence was turning out during trial it seemed extremely unlikely he would have been able to successfully argue that claim.
[0]: https://www.sec.gov/Archives/edgar/data/1418091/000119312522...