Plain English with Derek Thompson - Three Ways the Elon Musk–Twitter Showdown Could End

Episode Date: July 14, 2022

Well, that escalated quickly. Let's review, shall we? In January, Elon Musk started buying a bunch of Twitter stock. In February, he kept buying. In March, he owned about 5 percent of the company. In April, he offered to buy Twitter for $44 billion. In May, he tweeted a poop emoji. In June, his net worth crashed. In July, he tried to back out of the deal—and Twitter countersued. It seems very clear from the company's lawsuit that Twitter is prepared to take this all the way, possibly to even force Musk to acquire the company against his will. Big picture, Twitter is in an incredibly strange position. The company's lawsuit portrays Musk as if he's a wayward, flighty, bad-faith grown toddler. But Twitter is also is trying to force this very same wayward, flighty, bad-faith grown toddler to be the proud owner of Twitter. “You’re a jerk, and I hate you, now marry me!" is a weird message to send, even if it makes sense for the Twitter board to pursue this strategy, within the logic of shareholder capitalism. So, who's got the best argument? How will this thing end? Today's guest is Boston College Law School professor Brian Quinn. We do a deep dive into the documents of interest here—what Musk is saying, what Twitter is saying, and who’s got the strongest case. Host: Derek Thompson Guest: Brian Quinn Producer: Devon Manze Learn more about your ad choices. Visit podcastchoices.com/adchoices

What's up, everybody? Are you tuning in to the Challenge USA on CBS? Well, tune in to me, Tyson Apostle, as I break down each and every episode with my co-host, Amelia Weddemeier. I'm also a contestant on the show, which gives you all the insider scoop. Amelia, how stoked are you to do this? Tyson, I'm freaking excited. I cannot wait to sit my butt down every single week to watch the show, then come here and recap it with you on the Ringer Reality TV podcast. Today, three ways the Musk's Twitter showdown will end. We've got a corporate law expert on the show to discuss the breakup, what both sides are saying, and whether either side is making any sense.

But first, a brief history of this extraordinary romance. Twitter and Musk, Beauty and the Beast. In January, this year, Musk started racking up Twitter stock. By March, he had owned about 5% of the company. At the end of March, Musk has a meeting with Twitter. and their founder and former CEO Jack Dorsey. Jack apparently endorses the idea of Musk maybe taking over Twitter, joining the board, helping to reorient the company.

So Elon joins the board. And then days later, Elon leaves the board. Then he makes Twitter an offer. He says, I'll give you $54.20. Get it? $54.20 per share in cash. He's got the financing. Twitter's board thinks, hmm, as a fiduciary matter,

we kind of have to do this. We have to maximize shareholder value here, even though this is an awfully goofy offer. Can we really say no to this? Do we have a better plan to maximize shareholder value? They decide the answer to that question is no. They say yes to Elon Musk. They sign an agreement.

The date is April 25th. On April 25th, Tesla stock is at $1,000 per share. By June, it's crashed to the mid-600s. That's bad. On April 25th, Twitter stock is trading near $50 a share. By July, it crashes to the mid-Syches to the mid-year. mid-30s. And even that price might be partly buoyed by the slimmer of hope that this merger goes through. So you've got Musk, richest man in the world, but his net worth is plummeted by 35%

at the same time that the value of Twitter has declined by 20%. He realizes this deal sucks, because this deal sucks. And so Musk is looking for an excuse to get out of this sucky deal. He's like, what can I blame? What can I find? What pretext can I make up? And he settles on bots. bots, bots, bots, there are too many bots in this Twitter. And that brings us to this last week. On Friday, Musk announced his formal intentions to annul this marriage with Twitter. He made three key points, or his lawyers made three key points. Number one, too many bots.

Number two, I don't have access to enough information about said bots. And number three, Twitter stopped running its business in an orderly fashion since the merger agreement, and that is a violation of the covenant of the merger agreement. We will talk about all of those reasons in just a second. But the news of the week is that on Tuesday, Twitter filed a countersuit calling Musk something close to a liar who is operating on bad faith. And Twitter took each of Musk's claims head on. We're going to talk about each and everyone in all the ways that responded in just a moment. But it seems very clear from this lawsuit that Twitter released that Twitter's prepare to take this all the way and possibly even force Musk to do the somewhat unthinkable,

pay $44 billion to acquire a company he doesn't even want. So big picture, Twitter is an incredibly strange position here. It's hard to fully emphasize just how weird this situation is. The Twitter lawsuit portrays Musk like he's a wayward, flighty, bad faith, grown toddler. But Twitter is also trying to force this wayward, flighty, bad faith, grown toddler to be The proud owner of Twitter. What? You're a jerk. I hate you.

Marry me. Now. This is strange. You can say, of course, that Twitter's board is behaving perfectly rationally in a way. It is forcing a contractually obligated buyer to maximize shareholder value. That makes sense under the rules of shareholder capitalism. But in this particular case, maximizing returns for Twitter shareholders means forcing

somebody who does not want Twitter to be the judge jury and executioner of Twitter. Shareholder capitalism can take us to some very weird places. So that brings us to today's episode. My guest is Brian Quinn, professor of law at the Boston College Law School. Quinn is an expert on merger and acquisition law, and together we do a deep dive into both of these documents. What Musk is saying, what Twitter is saying, who's got the strongest case? We rank order Musk's three big claims from weakest to strongest, and we explain whether Twitter has the good to force a sale on its whimsical, would-be buyer, or otherwise, force Elon Musk to the table

for a deal. I'm Derek Thompson. This is plain English. Professor Quinn, welcome to the podcast. Well, thank you for having me. I want to start with the biggest picture here. I want to take out Elon Musk. I want to take out Twitter.

How uncommon is it for someone to want to buy a company, to sign a document saying, I'm buying this company, and then a few months later, get cold feet and call up a lawyer and say, get me the hell out of this? Is that general kind of remorse rare or common? Yeah, so taking all of the personalities out of this picture, right? Because that's actually the really the most interesting thing. But take all the personalities out of this. This is a pretty common story. We've seen this quite a bit in the past, and I suspect we'll see this in the future again, buyer decides to buy a company, pays a premium to get the thing that he or she wants. Something happens after they sign the contract. Market goes south or competitors pop in.

And then all of a sudden, it doesn't look like a good idea and the buyer gets cold feet. That's happened a lot and it's going to happen again in the future once we're past all of this. So let's now add back in the characters because this isn't any old merger with buyer's remorse. This is the richest man in the world trying to buy one of the most famous social media companies. So as a corporate law professor, in your professional opinion, how weird is this saga and what's the weirdest part of it? Yeah, it's pretty weird. You know, it's like he woke up on a Saturday morning and decided, you know, wouldn't it be fun to buy the largest social media company I can get my hands on? And then went ahead and did it.

And that doesn't happen very often. So this is pretty weird. just the whole way the thing was structured, making an offer basically via Twitter or text. The party's not really believing him initially. And then, you know, the offer was just too good. And they said, okay, fine, you want to buy it? Take it.

I find it so interesting that, you know, all romances have a kind of inversion of power, right? Like beauty is scared of the beast and then woo's the beast or Jane Eyre is a homely orphan, but then Wu's, what was his name, Mr. Rochester. In this, you have another inversion of power. Twitter is initially resistant to the idea of Elon Musk buying them. Elon Musk enforces this acquisition, this merger on them.

It seems like Twitter is reluctantly going along with the deal. And then three months later, the sides are totally reversed. Elon is trying to run away from the altar, and Twitter is like the jilted bride, you know, grasping on to the tucks saying, no, no, no, stay, you know, buy me and give my shareholders maximum value. That inversion just seems incredibly lurid to me. Yeah, and it's exactly accurate. It's exactly what happened. I mean, he shows up online, right, and says, I want to buy your company. And I'm sure internally, they're all saying to each other, he's not serious. But what this guy is going to buy our company? And someone says,

I'm sure he's got the money, but is he really going to buy or come? And so they adopt a poison pill. They take a very standoff approach, like we don't believe he's serious and on and not. And then he shows up with financing. Like, here's the money. At that point, one of the lawyers at Twitter has to say something like, you know, you have a fiduciary obligation to consider the fact that he's putting $54 on the table. Do we have any ideas that are worth $54.20?

A ridiculous number. And it turns out we don't, right? Okay. well, let's take it, and they take it, and now he wants to run away. And at which point, it's worse than a nightmare for Twitter. Why? Because the whole process, I mean, they were initially reluctant to do this deal, but the process has damaged Twitter for the long term. Now, when companies announce that they're being acquired, they're always going to be damaged, right? Because let's say you're a company making the second best product in the market.

You say, I'm getting purchased by XYZ. Well, then you're, You're a client who are like, well, why don't want to buy this guy's product anymore? Can they start shifting? Shifting away? All of your back office, like the lawyers, the HR department, all of the people who don't generate revenue for the company, but you need to make the company operate, they realize they're the first ones are going to get laid off. So what do they do?

They hit the street looking for other jobs. So the longer you're talking about getting the deal done, the more it hurts you. Yeah. And so they've been through that. And now, what, they have to start all over again? It's a nightmare for them. I have a lot of sympathy for people who work at Twitter and are trying to focus on their day jobs. Musk is, you know, he's in, he's out, he's in, he's out again.

You don't know if you're going to be a company that has the same leadership or whether they're going to be taken private in a handful of months. It's got to be a very confusing time to try to run a company. All right, now let's, I want to do a deep dive into the legal documents, into Musk's attempt to break up with Twitter and Twitter's attempt to cling on to Musk. there is a public disclosure provision in the original merger contract. And it says that Musk can tweet, quote, so long as such tweets do not disparage the company or any of its representatives.

End quote. So what does Musk do right after signing this? He immediately starts disparaging the company and its representatives. Poop emojis. Provojis. He's tweeting pooh emojis. He's tweeting about left-wing bias at Twitter. He's tweeting about how their decision to ban the New York Post briefly was, quote, obviously

and incredibly inappropriate. He goes after their general counsel, disparaging a representative of the company. Certainly, yeah, it's all there. And the problem, though, for Twitter is that at the time when he starts this, this kind of really disparaging the company and its representatives,

their only remedy is to say, hey, stop that, because they don't want to terminate the deal. They don't want to say, oh, you violated, let's terminate, we'll walk away. They don't want that. I mean, they want to do the deal because $54 matters to their,

stockholders. So it's like he's violated at the time. He's violated the terms of the contract, but they can't do anything about it because their only remedy is to walk away and they don't want to walk away at that point. Explain to me why it's legally important that Musk seems to have immediately violated the public disclosure provision with the poop emojis and all these tweets about general counsel. Why is it important legally that he did this? Yeah, so legally it's important. There are a couple of things. One, generally as a matter of law, if you have what they call unclean hands, if you're doing a bad thing, you can't then turn to the contract and benefit from the,

from the contracts terms itself, right? Specifically, in the contract itself, Section 8.1, the termination provision says, hey, here are, here's how one can terminate the contract. And by the way, if you're in violation of the contract, you don't get access to You can't use the contract terms to terminate. So it's, as a matter of general law, he has unclean hands because he's violating the terms of the contract reportedly right out of the gate. And then second, the contract itself is very specific on this matter.

If you're violating the terms of the contract, you can't then turn around and then rely on the contract itself to terminate. Tell me if this is a good summary of what you just said. The contract is designed to protect both buyer and seller. But if you're in violation of the contract, if you have unclean hands, you can't avail yourself of the benefits of the contract. You can't say, oh, I can use the thing that my lawyers purposely wrote in here in order to save me if something crazy happens in the world, like there's a pandemic or there's an earthquake or all the iPhones in the world disappear and no one can

use Twitter. You violated the contracts, so now you can't make use of those very items that might have helped you otherwise. Yeah, exactly. So, for example, if the contract says, Derek, you have to give Quinn X. And then once Quinn gets X, Quinn will give you Y, right? But then you refuse to give me X, right? And then you say, Quinn, I'm terminating the contract because you didn't give me Y. How's that going to work, right? So in the perspective of this contract, they wrote specifically in the terms of the contract in section 8.1 that, hey, if you're in violation, you can't turn to the contract itself and make use of the termination provisions. You're still bound. So let's take Musk's claims as seriously as we possibly can for a second. I think that

based on your analysis, based on other analysis that I've read, Musk is down, you know, a couple touchdowns heading into this part of the game, right? Like he has clearly violated some aspects of the disclosure provision. He is not in the strongest possible position to back out of this deal and not pay an enormous penalty. But let's take his claim seriously. A close read of his case. What are the three things that he and his lawyers are claiming? First, they're saying that Twitter did not provide Musk and his representatives with information that he was a, he was a, he was was afforded under the terms of the contract. Specifically, he's saying that he and his representatives required additional information about bots,

about fake accounts at Twitter, and that Twitter was reluctant or didn't give them the information that they needed. And so that was in and of itself a violation of that particular term of the contract, the right to receive information about the company. That's the first claim that they're making. The second claim that they're making is that, well, you know, geez, there are so many bots, right? And the bots make previous submissions to the SEC, previous disclosures to the SEC, materially false.

I mean, this information that he suspects, he doesn't provide evidence, but he suspects about the bots, means that these are previous submissions to the SEC are false, material misleading, that rises to the level of what's called a material adverse effect. And since he claims it's a material adverse effect,

he can walk away. So pretext one and two are basically there are too many bots, and Twitter isn't giving me enough information about these bots. I want to take those first two pretext head on before we hit pretext number three. So on April 21st, Elon Musk tweeted that he was going to go after Twitter's bots or die trying. And now he's saying he didn't know enough about the fact that there are so many bots. Like, this is particularly confusing to me because, like, you can claim that You're buying Twitter. It shouldn't be.

It shouldn't be confusing to you at all. Because this is a pretext. I say you should, when you read that section of the complaint, you know, turn on the black and white TV you have in your basement somewhere, watch the Claude Rains wander into Casablanca's Rick's Cafe and being shocked at there's gambling going on. He knew full well. April 21st, when he did this tweet, that was four days before they signed the merger agreement, right? In fact, the complaint alleges that there are text messages between Brett Taylor and Mussel. about whether, you know, must saying, well, don't purge the system of bots or fake accounts now, wait until it's a private company, right, they'll make it better.

You know, then there's the joint announcement when they signed the merger agreement. They say something like, we're going to take on the bot problem together, right? It's in the – when they announce the merger agreement, it's like, I'm taking on the bots. Later on, when he brings a number of high net worth individuals in to help with financing, Mark Andreessen says something like, there's only one person, this is on May 9th, there's only one person who can take care of the bots, and that's Elon Musk, right?

So this is something that was well known to him, right, as an issue, right, before they signed the merger agreement. It seems important to point out that not only is it implausible that Elon Musk didn't know about the bots. Elon Musk tweeted over and over and over again that he was doing this in order to clean up the bots. I mean, it just seems like a classic example of, you know, what people on Twitter say all the time to each other.

Never tweet. There is almost, there's no benefit to putting your strong opinions on Twitter because they will at some point be used against you and sometimes in a court of law, or at least in a Delaware court of chancery. Let's move on to claim number three. What is Musk's third claim? And is this one a little bit more plausible? Yeah, this is actually, of the three claims, this is the only one that's got, had me stop and think

for a while. And, you know, this is a claim that has some purchase, right? So the claim here is that after signing, Twitter fired a number of high-level individuals in the company and then engaged recently in a layoff of one-third of its talent acquisition team. So that's within the HR department, one-third of their recruiting team. They laid them off. And that since the announcement of the transaction, lots of people have been leaving the company. And that must representatives allege is a violation of the covenant to operate the business in the ordinary course.

And say what ordinary course means because it's a, I kind of understand what it means, but just like in plain language. Yeah, operate the business. Don't do anything out of the ordinary. You're running your business. Just keep running your business. Don't change too much. Don't like come up with a brand new product that no one ever heard of before. Don't say, oh, you know, we're ditching this product line. Just run your business the same way. Because the intention. of this particular provision is that it recognizes that between signing and closing, that might take time. And during that period of time, the seller has an obligation not to destroy the value of the company. A buyer wants to get with the buyer paid for. So don't ruin it, right? And they're making a claim that, hey, well, you know, you fired some people, you did some

things, and you're ruining it because of basically a human resources issue. And, you know, that's an argument that has some purchase. It's a kind of argument that in a Delaware court, even recently they've said, okay, you know, that works, right? You can walk away for a violation of the ordinary course covenant. Give me an example of a recent case where it had worked in the Delaware courts. Yeah, so for example, there's a case, A.B. Stable v. Moray was a case that went down during COVID. That involved the acquire buying a set of luxury hotels just before COVID, I think it was in January, December, January, December 2019 or January 2020. So they signed the contract to buy this chain of luxury hotels.

Suddenly, COVID, no one's going to hotels anymore. No one's going on vacation. I was in my basement for a month. And, you know, buyer says, well, you know, that doesn't sound like a good idea buying this hotel chain. Get me out of here, right? And they go to their lawyers. And the lawyers point to two reasons why the buyer should be permitted to

walk away. The first one being a material adverse effect, right? That the world change between signing and closing and it's adversely affected the business. I don't want to buy this business anymore. Let me go. And the second one, a second argument they made was that, hey, you're no longer taking reservations at these luxury hotels. There are no guests here. That's not the ordinary course, right? If it's something, but it's not ordinary. So get me out of here. And when that went to court in Delaware, the Delaware judge looked at the material adverse effect clause. And material adverse effect clause is a clause within the contract that recognizes terrible things can happen between signing and closing. And when those terrible things happen, someone has to bear the risk.

And it's an attempt by the parties before they sign to kind of assign risk to the buyer or the seller, right? And so, for example, in the material adverse effect clause, it says, well, terrible thing happens, buyer doesn't have to bear the risk. But if that terrible thing is, and there are a whole series of exceptions that are highly negotiated, for example, if that terrible thing is a decline in the stock market price or the stock markets generally, buyer bears that risk. If that terrible thing that happens is, you know, a lawsuit against the company because of the merger, fire bears that risk. If the terrible thing happens is a tornado hurricane calamity, fire bears that risk. So in the case of A.B. Stable, the court looked at the COVID and said, well, COVID is a pretty terrible thing, and it's pretty much a calamity. So that's a risk that the buyer bears.

Interesting. So up to now, in the case, they couldn't pull out of the deal because it was an act of God, but it was an act of God that according to the language in the contract, the buyer was going to have to bear that risk rather than this luxury hotel company. But then what happened? And then the court turns to the ordinary course covenant. and says, hey, you know, in the ordinary course of business, you take reservations. You have guests and you run your business. You're not doing that. That's not the ordinary course, not consistent with your past practice. So guess what? We're going to let the buyer walk. And he let the buyer walk. So the buyer walked away. So when I saw this in their in their

letter, that got my attention. So pretext number one, pretext number two, we're not putting too much weight into those. It does seem like mere pretext. But claim number three, seems like Musk's strongest case. So moving now to Twitter's response, the lawsuit that was filed on Tuesday, how did Twitter respond to claim number three, the ordinary course claim? Yeah, the ordinary course claim,

they just take it apart. So it's, so first and foremost, typically when parties negotiate the ordinary course covenant, the language is you're permitted to operate the business in the ordinary course and consistent with past practice. Now, this contract was basically a contract that was sent over to Twitter where must said sign it and I'll pay.

And then they negotiated for a little bit. And what they negotiated was additional certainty for the seller, right? So when they got the ordinary course covenant, apparently what they did was they struck out consistent with past practice. So they were able to operate the business in the ordinary course, but it doesn't have to be consistent with past practice, which is a big get for the seller. which means so long as it's ordinary, we can do it. But we don't have to do exactly what we did last week. This is, which sort of sounds like a little bit like, it's like a,

Musk was handling this a little bit like a Las Vegas wedding in a way. Like he's sort of rushing to the marriage altar. And in so rushing, he's taking out parts of the deal that might be better for him in the event that Twitter starts to, say, fire 30% of their talent acquisition team. Well, it's worse than that. It's worse than that. Peter also recounts for,

us in the complaint. Oh, and by the way, in the ordinary course covenant, there was a provision that said that we wouldn't fire anybody over over the level of vice president without asking your permission. But we struck that during the negotiations, and you said that was fine. So we retained the ability to hire and fire anybody we want for any reason without asking you. They also claim that they sent notices to Musk and his team saying, hey, we're going to let some of these people, some of these people go. We might want to start an employee retention program that might create incentives to keep people at the company. And what was most response to those? They were counting the complaint that, hey, you know, even though we didn't have to, we told him that we were going to

do some things, but we didn't have to, right, because we struck that. And if a judge wants to see the negotiations, we'll still them draft one, we show them draft two, and we can see clearly where we took it out. Right. So we thought about it and you let us keep that right. And then second, we all know, because we're in this together, is it in this business, we know that people leave the company when you announce a transaction. So we wanted to create an employee retention program that would create bonuses so that people would stay with the company through the closing. And as a matter of fact, Twitter says in the complaint that they raised this with the must during the negotiations of the contract. And he said, let's talk about that after. And then when after came,

he said, or through his representative, said, I'm not interested in a retention program, right? So he wasn't interested in creating the program that would keep people incentivized to stay at the company. And they use this against him, obviously, in the complaint. And also, there are facts suggesting that, hey, he appeared at the, at the employee in the employee town hall meeting. And someone asked, what about layoffs? And he said, well, you know, cost exceed revenues. There has to be some right sizing. Lots of signal. So the fact that there are, people were leaving, not a surprise. He seems to want that anyway. There's no retention program. Throughout the process, he's saying, I don't care if people leave. That's better for the profitability. I don't need to know if people are

leaving, stop bugging me with more information. I don't need to know if there's an employee retention program. Right. It's just sort of, I mean, to summarize, you know, this really sort of comprehensive take down of the Musk case, it seems like, you know, I'm counting sort of three big cases that fall on Twitter's side, or three big ways in which Twitter seems to have the strongest argument. Number one, Musk seems very clearly to be in violation of the public disclosure provision.

He has obviously disparaged Twitter, and that puts him at a tough position, because He now has unclean hands and can avail himself of some of the protections of the contract. Number two, there's the bot issue, which seems very transparently to be a pretext. He was bragging about cleaning up the bots, and then the market tanked, and he said, oh, there are bots, and claimed that that was a reason why he should get out of the deal. And then number three, the strongest possible case that he has, which is the ordinary course provision or the ordinary course element of this deal. Covenant, thank you.

That's not particularly persuasive as well, because, A, Twitter seems to have operated. more or less in ordinary course. And B, when they did lose people, when they did offer an employee retention program and ask Musk, how do you care about people leaving the company, he didn't seem to care. It's like whatever. So give me your general impression of the Twitter lawsuit. How strong is their position, as we now seem to be headed toward the Delaware Court of Chancery? I mean, obviously Musk and his representatives will have their opportunity to state the facts

as they understand them. So what we're seeing now is the facts, they're alleging facts that are from the plaintiff's point of view, right? So they'll have, Musk will have his opportunity. But it's extremely strong, right? This, the facts as alleged in the complaint put Twitter in a maximum position, should they want to negotiate price, should they want to seek a settlement, should they want to get specific performance under the terms of the contract? So this is the strongest possible argument that they can make. And just briefly, define specific performance, because that's a term that's come up a lot, but sometimes, times it's not defined. Yeah.

So in a contract, so typically, if one person violates the terms of the contract, we go to court and courts will offer a remedy. And the typical remedy is what we call damages, right? What was the value of the thing you were going to get? What didn't you get? Okay, we're going to give you a cash equivalent of that. Now, in certain circumstances, parties will get what's called specific performance. I contracted for you to build me the house.

You didn't build it. I need the house. And the court, for whatever reason, says, okay, construction company, build the house. It's an order to do the thing you've contracted for. So in this contract, it's extremely common in merger contracts. I think it's basically almost universal in merger contracts. Parties ask for specific performance as the remedy, the preferred remedy, not damages, but specific performance. And that's an order from the court to the buyer to complete the deal.

Let's talk about what happens next. Twitter is filed a motion to expedite. They're putting this case in the fast track. It seems like this case is going to be fast as far as corporate litigation goes, which means it could be all over within the next year. That's certainly faster. I think that a lot of people, or slower than a lot of people in the news business wanted to go.

We would like news by the day, by the hour. Well, the DuPont Hotel is quite nice if you can arrange to get down to the DuPont Hotel and spend a month on there. That's right. So tell me what you think happens next. We're in this really bizarre situation where Twitter is like, you don't want to buy us, and we, at least the employees of Twitter, don't really want you to buy us either. The reason that we're forcing to the table is that there's a fiduciary duty to maximize value for shareholders.

You offered a $54 a share. We're trading in the low 30s. So you're offering tens of billions of dollars more than the company is worth in the market. tell me where you think something like this might end. Yeah. So that's a very good question. So we're in court now, right, but it doesn't have to end in court. And most of these disputes don't end in court.

They get resolved outside of court without the judge having to make a determination. And my guess is that that's going to happen here, too. The only real issue is going to be which, you know, what result we see, right? Because I think there are three reasonable or three possible outcomes that one could reasonably expect, right? And I wouldn't put a percentage on any of them, right? But the three that are reasonably possible. The first is that the parties get together and they renegotiate the price of the deal. Same deal, different price with Musk moving forward to purchasing the company at that price.

So, for example, 5420, you know, can we find another number that ends in 420 that the board would accept? I don't know. But if he's going from 5420 down to 50, 50, the board. board might say, okay, you know, for like a 10% cut discount, we'd get the deal done tomorrow and the stockholders would still be really happy. Okay, let's do it. Right. But he might say, no, no, no, I need 42, right? 420. They get some to a number that he can deal with, right? 42. And the board might say, well, that's a big delta, right? I don't know if my stockholders would go for that.

No, right? So that's, that's going to, there's a negotiation, right? If the deltas are too big and what they're asking for it, they won't have. The second one is that they litigate this to the end. And given the facts that have been alleged, Twitter gets specific performance. And Musk is forced to do the deal at 5420. That's totally possible. Courts have ordered specific performance on merger transactions in the past, even when there's bad blood. Right?

In IBPV Tyson, buyer said, you can't force me to buy this company because I hate them. They hate me. There's so much bad blood because of litigation. And Chancellor Leo Strine, who is now a locktive. lawyer who apparently Twitter is hired. He said, well, if you own the company, you just fire them, right? What do you care? You don't have to work with these people. You just bought the company, fire them all. I don't care. Right. So that's totally possible, specific performance. But then there's also this other thing. You know, the board might say, well, look, you don't want to

buy us. That's pretty clear. And actually, we don't want you to buy us either. Right. So why don't you give me some money? That would be enough for me to let you walk away. Now, in the country, contract, they have this, you hear this refer to a lot, a termination fee of a billion dollars. Now, Twitter has the right to ask for a billion dollars in lieu of specific performance, but the billion dollars, not a lot of money, right? It is a $44 billion deal. But under the terms of the contract, the parties can mutually agree to just walk away. And so it's entirely possible that Twitter says something like, hey, you offered us 54, 20. We're trading now at 34. Why don't you give us $20 a share, then we'll let you walk away with, you know, and this all. That's the

beginning of a negotiation. That's not where it ends. That's the beginning of a negotiation. And then they go back and forth and there's going to be some number that'll be less than $20 a share, but more than maybe the $1 a share that you might get with the $1 billion termination fee. That will be enough for the Twitter board. Stayed to their stockholders. You know what? We didn't do that deal for $5420 because the guy wasn't going to do it. It's our fiduciary obligation to take money from him and then go. will run our business. If you assume that this deal cannot possibly end with Elon Musk being forced to spend $44 billion

to acquire Twitter, take it private, and run a company that doesn't want to run. If you, for whatever reason, think that's just too bizarre to imagine, then what you're really thinking about is a number between $1 billion, which is probably the lowest amount that Elon would have to pay in the event that he loses this case. It's going to be above that. It's not going to be a billion. And $20 billion, right? It's somewhere between $1 and $20 billion, let's say.

And maybe like that's where the real ballgame is, that you can look at the lawsuit, you can look at the Musk filing, you can look at everything the lawyers are saying, you can look at what Musk is tweeting. But fundamentally, this is about a math negotiation between the numbers of 1 and 20. That's sort of how I'm starting to think about how this case is going to go, because a settlement out of court, just all things considered seems much more realistic to me than Musk losing and being forced to acquire a company, he is no interest in running. Yeah, and that's basically, I think, certainly he can't make that argument to the court, and none of this will happen within the court. I would imagine at some point during the court, the court will say something like, I'm going to leave you two people in a room. If you can figure it out, figure it out. Otherwise, I'm going to come back here and I might make a ruling, right, at which point the court will try to push them through. Because the court obviously would much rather that the parties come to some conclusion on their own without testing the power of the court to enforce the contract. Very last question. Very last question. What if Musk says, I don't care? What if the court makes a ruling and Musk says, no, he's like, I live in Texas. I don't live in Delaware. I don't play by your rules. I'm getting on a rocket ship. I'm flying to low orbit. I'm living in a space station for the next five years. I am not paying whatever fee, whatever specific performance to Delaware court of Chancery comes down with. What happens then? Well, if it goes into the low orbit, it's a whole different matter.

But at least in the state of Texas, right? So you have to understand that the state, so this is a civil, a civil case, right? Not a criminal case, but a civil case. But the state of Delaware lives and dies by the corporate law, right? I don't think they have state income tax in Delaware, right, because of the corporate law. So they will do what they need to do to defend the corporate law. It's extremely important for them. It's a very high priority.

And if it becomes known or if there is a perception that you can just ignore what judges in Delaware say, that really becomes a big problem for Delaware to maintain its position as the place to go for corporate law, for business, for business. And they will do what's necessary to protect that because that's ballgame for them. So things like appointing a receiver. Musk is director and owner of a couple of holding companies, director and a number of other Delaware companies that have business in Delaware. By the way, I believe Tesla and SpaceX are incorporated in the state of Delaware. So if you're waging war against Delaware corporate law and your companies are based there, I mean, you're the professor and I'm not, but it seems to me like those corporations might be

subject to seizure if their CEO is in violation of Delaware corporate law? Well, I mean, it might, it would take me much more time to research and make sure, to, like, see how far down they can deep into other corporations. But, uh, it'd be very difficult for me to see Elon Musk, you know, and Tesla bringing a lawsuit in Delaware, trying to enforce Delaware's rights when he's like ignoring the Delaware court, you know, the judge's going to say you're here, right? What do you want? But so there's, so they have the right to reach out to these company. So all of the directors and these companies are subject to jail or jurisdiction, wherever they are, right? And they could reach out to these companies. Now, if he's in contempt

on an order, there's something called civil contempt. Now, Delaware can. They don't, because typically people, you know, comply, but they can enforce that, right? They can enforce that the night in jail. I mean, it could happen, right? But my guess is that if we were to reach that stage, Musk might say something like, well, I don't care about Delaware. We're moving all my companies to Texas. And I don't want to go to Delaware. Who goes to Delaware anyway? It's a tiny state and reincorporates its companies in Texas. And okay, so what does that mean? That means that Texas companies are the haven for billionaires who need not be subject to court jurisdiction. Is that what Texas wants? I don't know. I mean, if I was the Secretary of State of Texas, I might not want

that to be the place where you can go to just avoid court jurisdiction. So it's a, so it's hard. It'd be, it's a hard thing for him. I, yeah, TLDR, it gets very, very complicated. It's probably simpler if he goes into low orbit. That might be, uh, legally more straightforward. Brian Quinn, thank you so, so much. I really appreciate your help. Very happy, you're very happy.