He has the financing. He secured ~1/3rd of the funds based on committed LBO debt, ~1/3rd in margin loans against TSLA, and ~1/3rd in personal equity. Since then, he's been working to minimize the his personal exposure, but he can't just pretend not to own the TSLA stock he's borrowing against and selling to close the deal.
I believe the agreement would require him to finance the deal directly
From the proxy agreement
> cause the Equity Investor [Musk] to fund the Equity Financing, or to enforce the Equity Investor's obligation to fund the Equity Financing directly, and to consummate the Closing.
They can't want that, because it was a term Musk explicitly waived, publicly and notoriously, before he attempted to finance the deal. It was newsworthy, and well covered, that Musk secured the 13Bn of LBO debt in the first place.
What the media says (including musk) and what the term sheet says are two different things. If he mentioned mDAU could be fraudulent to anyone involved, they would be interested to hear what he had to say about it. I believe though that this is a move to reduce the risk and monies he has to pay to try to get a better deal ($30b perhaps?)
> If he mentioned mDAU could be fraudulent to anyone involved
One problem for Musk is he's been casting doubt on the bot numbers publicly, even before the deal. One of he's stated reasons for the deal was to deal with spam bots. Twitter has also reported basically the same 5% number in it's filings for years. If it really was a sticking point for Musk he should've done his due diligence before committing to to buy Twitter.
> they would be interested to hear what he had to say about it.
They can be interested all they want, doesn't mean they can back out of a deal unless they can demonstrate fraud or gross negligence on behalf of Twitter.
They can't just demonstrate "fraud" or "gross negligence". They have to demonstrate a "material adverse effect", which, as Matt Levine shorthands it, is something on the order of a 40% drop in profitability --- not the stock price, but the fundamentals of the company. Not happening.
> Wouldn't that qualify as material adverse effect?
Probably not. There has been one MAC finding in the history of MACs. It was a trifecta of fraud, management throwing in the towel the moment the merger was agreed and a massive revenue drop.
Musk’s only hope is to get his banks to pull financing. That’s going to be tough.
Would that even work, though? It’s not like he can’t afford it; his money is just tied up in TSLA. Presumably the court can force him to liquidate his shares if his lenders somehow back out.
No, I the two conditions other than a materially adverse effect that lets Musk back out are if his debt financing falls through or if the government stops it.
No, it doesn’t. The entire value of Twitter depends on their entire monetization. That comes from revenue per mDAU, not just mDAU.
Why should a disinterested, objective financier care if $1 billion dollars of revenue came with a real figure of 20% spambots rather than the estimated 5%? That just means true revenue per mDAU is something like 18% better than estimated.
If the real number is 50%, then true revenue per user is about double. If the real number is actually 99%, true revenue per user is about 20x. There would also probably be some very quick wins for improving the quality of the service.
There may be an argument for needing accurate mDAU figures - but Musk isn’t making one, the financiers didn’t ask for them, the market has NEVER had accurate figures for social media anyway, and there’s no legal standard for it.
It’s not a good thing to have more bots at the same revenue because you aren’t just buying a companies past performance but their future performance. If advertisers thought they were buying 1M real person impressions and it turned out to be half bits, next time they pay you money they would only want to pay half as much.
> If advertisers thought they were buying 1M real person impressions and it turned out to be half bits, next time they pay you money they would only want to pay half as much.
That’s if you assume that advertisers have no idea what the result of ad impressions are. (Which is an argument I’m sympathetic to, but isn’t flattering to the ad industry.) If they do have an idea of the results of ad impressions, it would mean that their ads are actually proportionally more effective than they thought, since their revenue brought in by ads has stayed the same but with fewer impressions.
