0:00

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, a million WETA Meyer.

I’m also a contestant on the show which gives you all The Insider scoop.

0:15

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 Twitter Showdown will end.

0:36

We’ve got a corporate law expert on the show to discuss The Break-Up 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.

0:53

In January this year musk started racking up Twitter, stock by March.

She 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 may be taking over Twitter joining the board, helping to reorient, the company, so Elon joins the board.

1:14

And then days later, Ilan leaves, the board that he makes Twitter.

And offer he says, I’ll give you fifty four dollars and twenty cents.

Get it, 54 20 per share in cash.

He’s got the financing Twitter’s board.

Thanks soon as a fiduciary matter, we kind of have to do this.

1:30

We have to maximize shareholder value here, even though this is an awfully goofy offer can be Only say no to this.

Do we have a better plan to maximize shareholder value?

Decide the answer.

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 one thousand dollars per share by June.

1:53

It’s crashed to the mid 600’s.

That’s bad on April 25th, Twitter stock is trading near 50 dollars, a share by July, a crashes to the mid 30s and even that price might be partly booyah.

A sliver 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%.

2:17

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 me, what can I, what can I blame?

What can I find?

What pretext can I make up?

And he settles on Bots.

Bots-bots-botswana are too many bots in this Twitter and that brings us to this last week on Friday.

2:41

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.

3:03

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 every one in all the ways that responded in just a moment.

3:22

But it seems very clear from this lawsuit that Twitter released that Twitter’s prepared to take this all the way and possibly, even Force musk to do the someone on think.

All pay forty four billion dollars to acquire a company.

He doesn’t even one.

So big picture Twitter is an incredibly strange position here.

3:42

It’s hard to fully emphasize just how weird the 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.

3:59

What?

That you’re a jerk.

I hate you.

Marry me now.

This is strange, you can say of course the 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.

4:17

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.

4:34

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 goods to force a sale.

4:59

On its Whimsical would-be buyer, or Otherwise Force, Elon Musk to the table for a deal.

I’m Derrick Thompson.

This is plain English.

5:32

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 in common, 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.

5:53

Is that General kind of remorse, rare or common?

Yeah, so taking all of the personalities out of this picture, right?

Because that’s that’s actually 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 in the future again.

6:13

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.

The buyer gets cold feet.

That’s happened a lot and it’s going to happen again in the future.

6:30

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?

6:48

And what’s the weirdest part of it?

Yeah, it’s pretty weird.

You know, it’s It’s like he woke up on a Saturday morning and decided, you know, wouldn’t it be fun to buy a the largest social media company?

I can get my hands on and then when I had did it and that doesn’t happen very often.

7:07

So this is pretty weird, you know, 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?

7:28

Like beauty is scared of the Beast and then Wu’s, the Beast or Jane Eyre is a home, the orphan.

But then Wu’s, the 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 Ilan.

7:52

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 onto the tuck saying no, no no stay.

8:10

You know, by me and don’t give my shareholders maximum value that inversion just seems incredibly lurid to me.

Yeah, and it’s exactly.

I could see exactly what happened.

I mean, he shows up on Line.

Right?

And says, I want to buy your company and I’m sure internally, they’re all they’re all saying to each other.

8:28

He’s not serious but what this guy gonna buy our company and someone says well I’m sure he’s got the money, but is he really going to buy a cup?

And so they adopt a poison pill, they take a very standoff approach like we don’t believe he’s serious and not enough 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 he’s putting $54 on the table.

8:52

We have any ideas that are worth fifty four dollars and twenty cents, ridiculous number and it turns out we don’t right okay 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.

9:09

Why?

Because the whole process I mean they were additional initially reluctant to do this deal.

But the process has damaged Twitter for the long term.

Now when companies announced 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.

9:28

You say I’m getting purchased by XYZ.

Well, then your clients are like well why don’t want to buy this?

Guy’s product teamwork and you start.

Shifting shifting away all of your back office.

Like the lawyers to HR department, all the people who don’t generate revenue for the company but you need to make the company operate.

9:44

They realized 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.

10:09

You don’t know if you’re going to be a company that has the same leadership, or whether going to be taken private and a handful of months, has got to be a very confusing time to try to run a company.

Now, let’s I want to do a deep dive into the legal.

Moments into musk’s attempt to break up with Twitter and Twitter’s attempt to cling onto mosque.

10:28

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 and quote.

So what is must do right after signing this, he immediately starts disparaging the company and its representative emojis.

10:48

Emojis, prove emojis, he’s tweeting who emojis he’s tweeting about And bias at Twitter.

He’s tweeting about how their decision to ban the New York Post briefly was quote, obviously an incredibly inappropriate goes after their general counsel disparaging a representative of the company.

11:03

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 and its Representatives.

Their only remedy is to say, hey, stop that because they don’t want to terminate the deal.

11:20

They don’t want to say.

Oh, you violated Let’s terminate with walk away, they don’t want that.

I mean, they want to do the deal because $54 matters to their stockholders.

So that’s like a, he’s violated at the time, he’s violated the terms of the contract but they can’t do anything about it because they’re only remedy is to walk away and they don’t want to walk away that point, explain to me why it’s legally important.

11:39

That musk seems to have immediately violated the public disclosure provision with the poop emoji is and all these tweets about general counsel.

Why is it important legally that he did this?

So legally, it’s important are a couple of things one generally.

11:55

As a matter of law, if you have unclear, 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, from the contracts, turns itself, right?

Specifically in the contract itself section.

12:12

Eight point, one of the termination provision says.

Hey, here are here’s how one can terminate the contract.

And by the way, if you are in violation of the contract, You don’t get access to 8.1, 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.

12:34

And then second, the contract itself is very specific on that is met this matter.

If you’re violating the terms of the contract, you can’t then turn around and then rely on the contract itself.

Determining tell you, 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.

12:55

You can’t say, oh, I can use the thing.

That my lawyers had 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 contract.

So now you can’t make use of those very items that might have helped you otherwise.

13:11

Yeah, exactly.

So, for example, if the contract says Derek, you have to give Quinn X and the 1, 1 squared gives get sex Quinn will give you why, right?

But then you refuse to give me.

X, right?

And then you say, Quinn, I’m terminating the contract because you can give me why, How’s that gonna work, right?

13:29

So in the district of this contract, they wrote specifically in the terms of the contract in session 8.1 that.

Hey, if you’re in violation, you can’t turn to the contract itself and make use of the termination provision to you’re still bound.

So let’s take musk’s claims as seriously as he possibly can for a second.

13:46

I think that based on your analysis based on other analysis that I’ve read, musk is down, you know, a couple touchdowns towns 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.

14:06

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 a mosque has Representatives with information that he was a he was a for Under the terms of the contract, specifically, he’s saying that he and his Representatives required additional information about thoughts about fake Accounts at Twitter and the Twitter Twitter was reluctant, or didn’t give them the information that they needed.

14:37

And so that wasn’t, you know, in and of itself a violation of that particular term of the contract, the right to receive information about the company, as the first claim that they’re making, the second claim that they’re making is that well, you know, G is, there are so many Bots, right?

And the bar, W was make make previous submissions to the SEC previous disclosures to the SCC, materially false.

15:03

I mean, this information, hey, that he suspects, he doesn’t provide evidence but he’s aspects, about the Bots means that these are previous submissions to the SEC are false or materially misleading that rises to the level of what’s called a material adverse effect.

And if, and since it’s a bit since he claims its material adverse effect, he can walk away.

15:21

So pretext Into 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 protects number three.

So on April 21st, Elon Musk tweeted that he was going to go after Twitter’s Bots or die trying.

15:41

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 the entire Twitter.

Okay.

Confuses you at all because this isn’t, this is a pretext I say you should.

15:57

When you read that section of the complaint, no, turn on the black-and-white TV, you have in your basement somewhere.

Watch, the Claude Rains wander into Casablancas.

Rick’s Cafe, being shocked.

That there’s gambling going on April 21st when he did this tweet, that was four days before they sign the merger agreement, right?

16:16

In fact, the complaint alleges that there are text messages between Bret Taylor and musk about what You know, Mustang will don’t don’t Purge the system of bots or fake accounts.

Now, wait till it’s a private company, right?

We’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?

16:37

Because it’s in there between the announced the merger games.

Like I’m taking on the box later on when he brings a number of high net worth individuals in to help with financing Marc 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 box and that’s Elon Musk, right?

16:56

This is something that was well known to him right as an issue, right before they sign the merger grinning sees important to point out.

That not only, is it implausible.

But 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.

17:14

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.

17:32

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, 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 purchased right?

17:49

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.

18:05

So that’s within the HR department, one-third of the 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.

18:29

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 Time the the seller has an obligation, not to destroy the value of the company, a buyer wants to get with a buyer paid for, so don’t ruin it, right?

19:01

And they’re making claim that hey well you know, you fired some people, you did some things and you’re ruining it because of the, 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 that works, right?

19:17

You can walk away for violation of the ordinary course.

Covenant, you give me an example.

Of a recent case where it works in the Delaware courts.

Yeah.

So, for example, there’s a case, a bi-stable v more.

I was a case that went down during during covid that involved the acquire buying a set of luxury hotels, just before covid said he was in January to semper January, December 9th, the 2019 are January 2020, so they sign the contract to buy this chain of luxury hotels, suddenly covid.

19:49

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 is get me out of here, right?

And they go to their lawyers and the lawyers, the lawyers appointed two reasons, why?

20:06

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 We’re taking reservations at these luxury hotels right there.

20:25

No there no there.

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 at the material adverse effect cause and material, adverse effect Clause is a clause within the 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 The parties before they sign.

20:54

The kind of a sign risk to the buyer or the seller, right?

And so for example in the material adverse effect closets as well.

Terrible thing happens, buyer doesn’t have to bear the risk but if that terrible thing is and their whole series of exceptions that are highly negotiated.

21:09

For example, if that terrible thing is a decline in the stock market price of the stock markets, generally firebears that risk.

If that terrible thing, that happens is, you know, a lawsuit against the company because of the merger.

A separate.

If the terrible thing happens, is a tornado hurricane Calamity, firebears that risk.

21:28

So, in the case of a bi-stable, the court looked at the covid and said, well, covid is 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.

21:44

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 says, hey, you know in the ordinary course of business you take reservations.

22:02

You have, 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 lay and he let the Bible.

So the buyer walked away.

So when that when I saw this in the in there in there in there letter that got my attention.

22:19

So pretext number one, pretext, number two were 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.

22:36

How did Twitter respond to claim?

Number three, the ordinary course claim.

Yeah, the ordinary course, can’t, they just take it apart.

So, it’s, it’s a first.

First, and foremost typically, when we went parties, negotiate the ordinary course, Covenant, the languages, Has your permitted to operate the business in the ordinary course and consistent with past practice.

22:57

Now, this contract was basically a contract that was sent over to Twitter, where must had signed it and I’ll pay and then negotiated for a little bit of 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 there, they’re 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 for the for the seller.

23:27

Which means, as long as it’s ordinary, we can do it but we don’t have to do exactly what we did last week.

This is if it was it was sort of sounds like a little bit like it’s like a musk with handling that’s 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.

23:45

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.

So it’s worse than that.

It’s perfect.

You’re also recount for us in the, in the in the 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 a level over over the level of Vice President without asking your permission.

24:11

But we struck that during the negotiations and you said that was fine.

So we retain the ability to Fire 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 gonna let somebody people.

24:26

So these people go, we might want to start an employee retention program that might create incentives to keep people at the company and what they were counting the complaint that, hey, you know, even though we didn’t have to, we sent some, we told him that we were going to do some things, but we don’t have to write because we struck that and if the judge wants to see the negotiations are still in draft one.

24:45

Michelle Them draft to and we can see clearly where we took it out, right?

If you thought about it you let us keep that 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 announced a transaction.

So we wanted to create an employee retention program that will create bonuses.

25:03

So that people would stay with the company through the closing.

As a matter of fact, Twitter says, in the complaint that they raised this with must during the negotiations of the contract.

And he said, let’s talk about that after.

And then, when after Name.

He said, or through his representative said, I’m not interested in a retention program, right?

25:21

So he wasn’t interested in creating the pro in the program that would keep people incentivised to stay at the company and they use this against him, obviously in the complaint.

And also, their facts suggesting that, hey, he appeared at the at the employer and the employee town hall meeting.

25:37

And someone asks, what about layoffs?

And he said, don’t you know, Costs exceed revenues.

It has to be some right-sizing.

And lots of signal right back to their 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.

25:53

I don’t need to know if people are leaving.

Stop bugging me with more information.

I don’t need your help, desperately retention program, right?

It’s just sort of.

So I mean to summarize, you know, this really sort of comprehensive takedown of the must case.

It seems like you know I’m counting sort of three big cases.

26:09

Had fallen 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 them at a tough position because nihi, and now has unclean hands and can Avail himself of some of the protections of the contract.

26:29

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 up, there are Bots and claimed that that was a reason why he should get out of the deal.

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 could covenant.

26:49

Thank you, that’s not particularly persuasive as well because a Twitter seems to have operated more or less in ordinary course.

And be when they did lose people, when they did offer an employee retention program and asked musk, how do you care about people leaving the company?

27:06

He didn’t seem to care, 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 obviously musk.

And his Representatives will have their opportunity to State the facts as they understand, right?

27:24

So what we’re seeing now is the fact that they’re alleging facts that are from the plaintiffs point of view, right?

So they’ll have musk will have his opportunity but it’s extremely strong.

Write this this the facts as alleged in the complaint put Twitter.

27:39

ER, 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.

They can make and just briefly define specific performance, because that’s a term.

That’s come up a lot, but sometimes it’s not defined.

27:55

Yeah.

So it’s just in a, 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 is what Damages.

Right?

28:10

What was the value of the thing?

You’re going to get, what?

Didn’t you get?

Okay, we’re gonna 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 record for whatever reason, says, okay comes to Construction Company build the house.

28:31

It’s an order to do the thing you’ve contracted for.

So in this contract, it’s extremely common.

In merger contracts.

It’s I think it’s basically almost Universal, intercom.

Attract parties ask for specific performance.

As the remedy, the preferred remedy not damages, but specific performance.

28:46

And that’s an order from the court to the buyer to complete the deal.

Let’s check out what happens next.

Twitter has filed a motion to expedite their putting this case in the fast track.

It seems like this case is going to be fast.

29:04

As far as corporate litigation goes, which means it could be all over within the next year that certainly faster.

I think that a lot of people are slower than a lot of people in the news business wanted to go.

We would like, you know, news by the day, by the hour, we don’t do my hotel is quite nice.

If you can arrange to get down to the DuPont Hotel and a month.

29:22

And that’s right.

So tell me.

What you think happens next for in this really bizarre situation where Twitter is like you don’t want to buy us and we at least the employees or 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.

29:42

You offer to fifty four dollars 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.

29:58

So this is that’s a that’s a very good question 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 what result we see, right?

30:17

Because I think there are three reasonable three possible outcomes of one could reasonably expect, right?

And I wouldn’t put a Signage on any of them, right?

But the three that are really 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.

30:38

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 might say, okay you know for like a 10% cut discount, we get the deal done tomorrow and a stockholders would still be really happy.

30:59

Okay.

Let’s do it right but he might say no no no I need 42, right 420.

It gets into one 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?

31:14

So that’s that’s going to there’s a negotiation right at 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 has been alleged Twitter, get specific performance and musk is for musk is forced to do the deal of 45420 that’s totally possible.

31:32

For courts.

Have have ordered a specific performance on merger transactions in the past even when there’s bad blood right in IB p, v Tyson.

Buyer said, I can’t force me to buy this company because I hate them.

They hate me.

There’s so much bad blood because the litigation and Chancellor Leo strine who’s not a lock of Wachtel lawyer, who apparently put her as hired.

31:54

He said, well if you own the company you just fire them, right?

What do you care?

All right, you want to work with these people, you just bought the gummy, fire them all out of here, right?

So that’s totally possible specific performance but then there’s also this other thing, you know, the the board might say, We’ll look, You don’t want to buy us, that’s pretty clear.

32:13

And actually we don’t want you to buy us, even right?

So why don’t you give me some money?

That’s that would be enough for me to let you walk away.

Now in the contract, they have this hear this referred to a lot, a termination fee of a billion dollars.

And I’ve 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?

32:35

Is a forty four billion dollar deal.

But under the terms of the contract, the parties He’s can mutually agree to just to walk away and so it’s entirely possible to Twitter says something like hey you offered us 5420 we’re trading now at 34, why don’t you give us twenty dollars a share.

Then we’ll let you walk away with, you know, and and and the salt that’s a beginning of a negotiation.

32:55

That’s not where it ends, right.

That’s the beginning of a negotiation and then they go back and forth.

And there’s gonna be some number that will be less than $20, a share.

But more than maybe the one dollar share that you might get with the term with the 1 billion dollar termination fee, that will be enough for the Twitter board state of their stockholders, you know?

We didn’t do that deal 45420 because the guy wasn’t gonna do right if you just kick it, it’s introduced its our fiduciary obligation to take money from him and then go run our business.

33:20

If you assume that this deal, it cannot possibly end with Elon Musk being forced to spend forty four billion dollars to acquire Twitter, taken, 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 In 1 billion, which is probably the lowest amount that you line would have to pay in the event that he loses.

33:44

This case, it’s going to be above that, that’s not an 20 billion, right?

It’s somewhere between 1 and 20 billion, let’s say, and maybe like that’s where the real ball game, 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 one and twenty.

34:02

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 Is considered seems much more realistic to me than musk losing and being forced to acquire a company.

He has no interest in running.

Yeah.

34:18

And that’s basically, I think I certainly can’t make that argument to the court and none of this will happen within the course not.

But I would imagine at some point during the court.

The girls is something like, I’m Gonna Leave You two people in a room it out.

Figure it out, but it wasn’t a comeback here.

I might make a ruling, right?

And which point that you tried 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.

34:40

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.

35:00

I’m getting on a rocket ship.

I’m flying too low orbit.

I’m living in a space station to next.

Five years, I am not paying whatever, fee, whatever, specific performance, the Delaware Court of Chancery, Down with what what happens then?

Yeah, well if it goes into low orbit, it’s good.

35:16

The thought that the whole different matter and part of these taxes, right?

So you have to understand that the state the this is a civil civil case, right?

Not a criminal case, but civil case, but the state of Delaware lives and dies by the corporate law, right?

35:32

I don’t think they have a state income tax in Delaware, right?

Because of the corporate law.

So they will do what they need to do to defend.

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 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 ball game for them.

36:10

So, things like appointing.

A receiver musk is director and owner of couple of holding company’s director, a number of other Delaware companies that have business in Delaware, or by the way that they believed Tesla and SpaceX are Incorporated in the state of Delaware.

36:27

So if you’re Waging War against Delaware, corporate law and your companies are based there.

I mean, I’m your, 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.

36:43

Well, I mean I it might it would take me much more time to research and make sure it did like see how far down they can deep into other corporations but it’d be very difficult for me to see Elon Musk, you know and Tesla bring a lawsuit in Delaware to enforce Delaware’s rights when he’s like ignoring the Delaware Court would be able to judge.

37:00

No say you’re here, right?

What do you want?

But so there’s so they have the right to reach out to these companies.

So all all of the directors and These companies are subject to or jurisdiction wherever they are, right?

And they could reach out to these companies.

Now, if he’s in contempt on a, on a, on an order, there’s something called civil contempt about Delaware Ken.

37:22

They don’t because typically people, you know, comply but they can enforce that, right?

They can enforce that by the night in jail.

I mean, it could happen, right?

But my guess is that if we were to reach that stage must might say something like, well, I don’t care about Delaware.

37:39

Where we’re moving, all my companies to Texas, and I don’t want to go to Delaware who goes to Delaware.

Anyway, it’s Thai State, and we incorporate those companies in Texas.

And okay, so what does that mean?

That means that Texas companies are the Haven for billionaires who need not be something to court jurisdiction.

37:57

Is that?

Is that the Texas wants?

I don’t know, I mean, I was the Secretary of State of Texas.

I think that want that to be the place where you can go over there, just avoid Court jurisdiction.

So it’s a it’s hard, it would be, it’s a hard thing for Yeah, tldr, it gets very very complicated.

38:13

It’s probably simpler.

If he goes into low orbit that might be legally more straightforward.

Brian Quinn.

Thank you so so much.

I really appreciate your help very happy dream.