And Here We Go (Musk)


by Karl Denninger, Market Ticker:

Gentlemen, start your lawyers!

We refer to (i) the Agreement and Plan of Merger by and among X Holdings I, Inc., X Holdings II, Inc. and Twitter, Inc. dated as of April 25, 2022 (the “Merger Agreement”) and (ii) our letter to you dated as of June 6, 2022 (the “June 6 Letter”). As further described below, Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement).

It appears that both Musk and Morgan Stanley have been asking for the data to substantiate the mDAU figures are not frauds and, for the last two months, have not gotten the requested information — at least not to their satisfaction.


This is a serious problem because when you enter into a merger agreement what’s under the Kimono is no longer your sole property; it now also belongs, for the purpose of confirming you didn’t lie, to the acquiring party.

Been there done that.

Among materials that are arguably even more serious than the mDAU figures are budgetary numbers including those worked up by its financial advisors for 2022.  He alleges he didn’t get them.

There was a cure period specified (appears to have been 30 day) and it now has lapsed, and thus Musk is exercising the option to walk off.

Needless to say I’m reasonably-sure this won’t be an uncontested divorce, particularly given the presence of a very large break fee in the agreement.

Oh, and the really nasty part of it?  In a lawsuit you get to take depositions and subpoena documents which will include the material that Twitter does not want to disclose.

And you thought fireworks were a 4th of July thing eh?

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