What is going on here? My initial reaction was that Musk was joking, that this was just a way to troll people online. It is, after all, Friday the 13th. “Still committed to acquisition,” he tweeted two hours later. Obviously this would be a bad joke, insofar as it “sent Twitter stock tumbling as much as 25% in premarket trading.” You are not supposed to say things that aren’t true and that will affect the stock of a public company that you are trying to buy. That is what is usually called “securities fraud,” or what I sometimes like to call “lite securities fraud.” Musk has a long history of lite securities fraud: He used to make jokes about Tesla Inc. introducing new products or going bankrupt, and he notably settled a fraud lawsuit with the U.S. Securities and Exchange Commission because he tweeted that he had secured funding to take Tesla private but had not. If he just woke up feeling frisky and tweeted a joke about Twitter’s bot accounts, a joke that wiped billions of dollars off Twitter’s market capitalization, that would be totally unsurprising. Bad! Not really allowed! But very much in character.

We have discussed this before, but ordinarily in merger agreements there is a clause saying that the buyer and seller “shall consult with each other before issuing any press release or otherwise making any public statements with respect to” the merger. Clear and consistent communication is really important; you don’t want anyone accidentally making statements that spook the market. Twitter’s agreement with Musk has that clause (Section 6.8 ), but it has an exception: “Notwithstanding the foregoing, [Musk] shall be permitted to issue Tweets about the Merger or the transactions contemplated hereby so long as such Tweets do not disparage the Company or any of its Representatives.”

You can see why Musk wanted that exception: His highest priority, the thing that he has fought over with the SEC, the reason he is buying Twitter, is his desire to tweet unsupervised. “Everyone can tweet whatever they want” has shoved aside “colonize Mars” or “transition the world to sustainable energy” as the thing Musk is interested in these days, so of course his merger agreement lets him tweet whatever he wants without running it by anyone. And you can see why Twitter gave him the exception: They had to, plus I guess more tweeting is good for Twitter.

But there’s a reason merger agreements usually say that the buyer and seller will consult with each other before making significant announcements about the merger! What a stupid mess this is.

nemo wrote: ↑Sun May 01, 2022 10:43 am Will anyone be surprised if he is just jawboning the company to manipulate the price and make a killing without actually completing the buy?

canucklhead wrote: ↑Tue May 17, 2022 10:05 am Turns out Musk had some good reasons to put the deal on hold. FRAUD fake accounts, bots, inflated follower numbers. Who'd a thunk?? Eh!
One of the engineers Siru Murugusan just admitted its not a free speach platform at all and in his words " run by commies"