As predicted, Twitter has sued Elon Musk, filing a criticism drafted by Wachtell and Wilson Sonsini litigators. But as Twitter provides above 60 web pages of completely brutal allegations painting Musk’s organization acumen as only a little eliminated from handing a seal a few beach balls and quite a few billion dollars, my primary takeaway from the complaint was: joy.
Authentic, authentic, Biglaw pleasure.
Elite law companies aren’t regarded for giddy emotions, but the complete deal reads as law firm enjoyment from start out to end. From Simpson Thacher and Wilson Sonsini negotiating a deal tailor-created for this moment, acquiring every single concession alongside the way. To counseling Twitter via the offer as Musk managed to live up to every single one of the attorneys’ rock-bottom expectations. To the instant Wachtell bought to arrive in and acquire the deal shepherded by two other corporations and change it into an absolute scorcher of a complaint. Absolutely everyone warrants credit rating and the closing dinner on this just one may possibly basically value a billion dollars and be completely truly worth it.
In fact. This is the very first tweet of a thread livetweeting her looking through of the criticism which is worth a glance.
But the lawyerly motion begins at paragraph 32:
The following day, on Sunday, April 24, 2022, Musk tried all over again to drive Twitter’s hand. He shipped a letter to the board repeating that his $54.20 for every share present was “best and last,” threatening at the time far more to market all of his shares if his bid had been rejected, and saying he would suggest a “seller friendly” merger agreement to be signed ahead of the current market opened the next day. Musk’s counsel sent in excess of a draft agreement, reiterated that Musk’s give was not contingent on any thanks diligence, and underscored that the variety of the proposed agreement was “intended to make this effortless on all to get to a offer asap.”
Twitter and its counsel harbored true fears that Musk may possibly bypass the company and get the offer straight to shareholders, so it wasn’t all enjoyment and games in April. And which is when Musk instructed them that he desired a “seller friendly” settlement that was not contingent on because of diligence.
Let’s get some footage of the Twitter legal staff upon hearing that:
Each excellent negotiation commences with having all your leverage off the desk!
But it did not stop there, for the reason that Twitter’s transactional attorneys then bought a chance to negotiate like kids in a sweet store with grandma:
The settlement was negotiated as a result of the night time and, in the process, grew to become even extra vendor-friendly. Amid the provisions not contained in Musk’s proposal but bundled at Twitter’s insistence were being an endeavor by defendants, which include Musk, to “take or induce to be taken . . . all actions and to do, or result in to be done, all matters required, proper or advisable” to obtain the funding (currently fully commited) to consummate the transaction, Ex. 1 § 6.10(a) a clear disclaimer of any funding affliction to closing, id. § 6.10(f) and a suitable on Twitter’s portion to request and instantly receive updates from Musk about his progress in acquiring financing, id. § 6.10(d). These provisions ensured that funding would be no obstacle to closing and that the corporation would have the ideal to stay informed of Musk’s progress in arranging his funding.
Doing the job by way of the night will have to have by no means felt so very good.
The working day after the get-togethers declared the merger settlement, I predicted Tesla buyers would flee in droves and blow up a enormous chunk of Musk’s wealth due to the fact they would, justifiably, anxiety tying their cash to anyone who would enter a offer like this. And that was before I understood he’d Questioned for it to be vendor helpful.
Twitter legal professionals should have had the very same considered about the hazards this announcement posed to Musk’s funds simply because they questioned for AND Got this qualification as well:
Twitter more negotiated to slender the instances underneath which -13- defendants could escape the offer by claiming a “Company Materials Adverse Influence.” In addition to excluding, for case in point, marketplace-large and business-extensive effects and situations and declines in inventory selling price and monetary efficiency, the last definition excluded matters relating to or resulting from Musk’s identification or communications, “performance” of the arrangement, and any issue disclosed by Twitter in its SEC filings other than the “Risk Factors” and “Forward-On the lookout Statements” sections of these disclosures. Id. Art. I.
A grasp course in covering client ass. Which is of course a transactional attorney’s work.
It is not like Musk did not have representation. Musk was represented in this offer by Skadden, prompting somebody to question me how Skadden could’ve let a little something like this happen. I dunno, but…
What’s Skadden meant to do? As extensive as every little thing is authorized and the firm gives Musk with entire facts about what’s going on, Skadden kind of has to roll with it. I refuse to believe that Skadden preferred to waive each possible defense to create an complete disaster of a deal for Musk, but primarily based on the narrative of the criticism, he would seem to have saved telling them to go ahead.
Twitter also negotiated the proper to demand certain effectiveness, which looks specifically relevant suitable now:
It is difficult to envision it will appear to that, due to the fact particular performance is these types of a drastic type of relief and a person expects that somebody will prevail upon Musk to settle just before that transpires. But Twitter naturally owes it to its shareholders to desire the comprehensive $40-some-odd billion somewhat than settling for the $1B option relief — while specified Musk’s antics, it’s likely in the finest pursuits of the shareholders to consider significantly less and maintain Musk’s fingers away from the rudder.
Soon after celebrating a slam dunk agreement, Twitter attorneys had to temperature the road to closing. Musk experienced waived due diligence so almost nothing could definitely derail this deal “absent a Organization Materials Adverse Impact or a substance covenant breach by Twitter.” As the grievance notes, “Musk experienced to test to conjure 1 of those people.”
He began slow with disparaging posts about Twitter, supplying Twitter an excuse to kill the deal. With billions and billions on the line, Twitter refused the bait.
So then he goes after the existence of bots. Twitter has created steady, qualified representations that bots make up fewer than 5 p.c of its buyers. Despite waiving diligence and acquiring produced the existence of bots 1 of the reasons for his determination to obtain the firm, Musk abruptly demanded to know extra about bots and threatened the deal if bots amounted to a lot more than 5 p.c (which… unless of course they amounted to one thing mad like 50 % there is very little opportunity it would be material, but this is the scent of desperation below).
So Twitter gave him a specific report on how it calculates bots on May well 13 (sample of approximately 9,000 accounts). Musk immediately goes on Twitter and suggests Twitter samples 100 accounts?!?! Then he tweets about Twitter complaining that he seemingly lied about the methodology. And then on June 30…
Certainly, in a June 30 dialogue with [Twitter CFO Ned] Segal, Musk acknowledged he experienced not examine the in depth summary of Twitter’s sampling course of action delivered back in Could.
Holy hell. What is even heading on below? He’s tweeting allegedly wild misrepresentations about the methodology just before reading it? This is the instant companies began making ready their pitches for the litigation business enterprise.
Musk’s complete defense looks to be that Twitter did not give him facts when the allegations suggest he waived his rights to most info, they furnished him with tons of information gratuitously (which include a uncooked feed of all of Twitter amounting to 49 tebibytes which I didn’t even know was a genuine variety right up until now), and then this galaxy brain admits to Twitter that he’s not even seeking at it.
Musk’s acquired Skadden by now and is bringing on Quinn Emanuel for this case. I’m wondering, for them, this established of specifics does not spark joy.
And Musk’s ongoing tweeting absolutely doesn’t. You know there was an net hoax boasting that Twitter had banned Musk soon after the offer went bitter. Why? He’s just pumping out a lot more and more damning evidence for Twitter’s declare that he’s only trying to hurt the organization and exit the deal. Permit him continue to keep talking!
In the early early morning of July 11 (Eastern time), Musk posted Tweets implying that his information requests have been never intended to make development towards consummating the merger, but instead were element of a prepare to power litigation in which Twitter’s data would be publicly disclosed:
We talked about that a person on the left earlier in the week, noting that Professor Hasen had already pegged that a person for an exhibit number. So it is secure to say that the lawyerly joy of observing each individual prediction in this scenario appear to go quickly has spread to law professors too.
I proceed to be flummoxed by Musk’s idea that he’ll at any time see this knowledge in court. How is it applicable? He waived diligence and Twitter statements that its community SEC filings mirror its screening methodology. The only appropriate proof would appear to be “what’s your methodology and does it regularly turn up a less than 5 percent determine?” He agreed to invest in the organization based mostly on that representation so the only discovery he must get would be limited to people reps… which is probably all in the report he’s hardly ever read through in any case.
There’s a extensive way to go and Musk will have a prospect to describe all of this, nevertheless with most of the worst allegations backed by publicly offered tweets, it’s challenging to see how.
But appropriate now, let’s just recognize the second. This is one particular of individuals unusual cases exactly where every person (on Twitter’s side in any case) from the delivery of the deal to the courthouse actions has viewed the fruits of their labor promptly pay off. For a work which is commonly messy and designed off compromise and caveats, which is enjoyable to witness.
Criticism on the next web page.
Before: No Stranger To Spending Aid Immediately after Screwing All over, Elon Musk Faces Twitter Lawsuit In excess of Failed Offer
Joe Patrice is a senior editor at Previously mentioned the Law and co-host of Considering Like A Lawyer. Feel absolutely free to email any suggestions, queries, or comments. Adhere to him on Twitter if you are fascinated in legislation, politics, and a healthy dose of university sports activities information. Joe also serves as a Taking care of Director at RPN Government Search.