The WSJ opinion is from individuals without expertise in the relevant law, neither of them practice in M&A, nor does Professor M. Todd Henderson teach law that overlaps with M&A (either presently or in the past).
I' wouldn't give their opinions any more weight than any other lawyer talking outside their area of expertise and in this case they are both way outside their areas of expertise.
I didn't ask you to give their opinions weight. I said they make a convincing case, and notwithstanding your dismissal of their credentials, I'm perfectly capable of evaluating what they said based on the merits. Reality is that a court has a lot of discretion in how they apply remedies, but it would be unlikely to successfully order this deal competed by specific performance (unless that's what Musk secretly wants).
I don't think it is particularly complex, as deals and contracts go this one doesn't seem that high on the complexity - just lots of money.
Lol. Honestly, I'm really laughing about this. There is no such thing as a "non-complex" acquisition of a multi-billion dollar company. There are thousands of points to still be negotiated and agreed, and thousands (if not millions) of relationships and contracts that have to be evaluated and assigned. Is the court going to sit in and order resolution of every single thing that's outstanding? There is almost certainly thousands of hours of legal work to be done here, and at least 3-5 times as much non-legal work. For context, the last M&A I saw the details on (a fairly friendly one), had more than 15 attorneys on one side (with 2 different firms), plus in-house attorneys and the "othersides" inhouse and outside counsel. Of those 15 at least 8 had over 200 hours billed on the deal, and for the 3 primary in-house attorneys it was effective their full time job for more than a month and part time for several other months.
All of that work is guided by the business judgements of the parties.
Is the court going to babysit that and put a thumb on the scale? How exactly are they going to do it?
Nope, specific performance is for discrete actions that the court can manage, not for an order to work on a transaction of this magnitude. The correct answer here is breach of contract, and Twitter's recovery will be limited to damages. Unless they can establish a harm (which is debatable), and that the harm can not be made whole with money but only by the acquisition of the company, they really have no chance of specific performance. Even if they could establish such a harm, the inclusion of a liquidated damages provision undercuts the argument that only specific performance will cure that harm (that provision is a literal admission of the parties both that the contract can be breached and that money damages can be adequate recompense).
I personally think the WSJ's argument on the non-enforcement of the liquidated damages' clause was too dismissive. While it's arguable that Twitter can't show material damages, there are enough nebulous things outstanding that could be damage that there will be a hook to defend the liquidated damages.
Musk's statements are strongly indicative that he is looking for a pretextual way to exit the deal and he suddenly developed cold feet after his Tesla stock valuation crashed.
Are they really "strongly indicative"? I think that's your own view. Musk's comments also seem to reflect his honest opinion that spam bots comprise a much higher percentage of the accounts in question than Twitter reports. Or do you somehow disbelieve him on that point?
Maybe phrase it another way, what percentage of Spambots would allow Musk out of the deal? It can't be that it's immaterial where there is a representation made by Twitter in it's Securities Law filings (which are public) and that representation (along with all others) was incorporated by reference into the agreements. Honestly, if you can't set that point you're not being rational, and if you can set it, you're admitting that Musk could have a valid objection.
Now it could be that Musk is wrong about the rate of Spambots, but neither you nor I are remotely in a position to make that conclusion.
My point is you missed the point. Corporate compliance is not designed to be an academic study. There's virtually no chance that it doesn't have material issues in design and implementation that make the conclusions suspect and that invalidate the degree of certainty.
Sure, but material adverse effect in Delaware courts is an absurdly high bar. I don't think it will be possible for him to clear that bar.
That's a cogent argument and you probably have a point. Though the most likely remedy is still damages not specific performance.
I get the basic principal there but the devil is in the details. If it's a daily sample, then it's really a sample size of 100 repeated 90 times.
No it is an aggregated sample. As I described to Tom they could get the exact same sample all at once. If they are using 9000 samples for the analysis, then the sample size is 9000. The fact that they have stratified them over time is immaterial to the analysis. There isn't a good reason to not do uniform sampling over time, and may well be a benefit. The other major benefit to doing it daily is that they appear to use labor intensive analysis for each sample, so they can assign one or two analysts and have them work daily; rather than putting 180 analysts on it at the end of each quarter; or do the pull on the last quarters data and have each report be lagged by an additional quarter.
I'm bored with arguing this irrelevancy. Whether you agree or not, do you understand that Twitter could have in fact presented this to Musk in their meetings as a sample of roughly 100 accounts pulled each day?
It literally doesn't matter if you're 100% correct about how the study is run, a court is not going punish Musk for citing to samples of 100 if that's approximately the size of the daily sample. They'd have to argue in court that he didn't provide enough context to make it clear that the 9000 samples were run quarterly (which by the way is almost certainly not the way it actually occurs - I guarantee you there is a daily statistic generated, whether just for that day or on some kind of rolling basis, is immaterial) for the 5% reporting threshold. But then, Musk could point out that they didn't in fact disclose this in their 10Q.
Here's what they said in the most recent 10Q:
We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.
So just looking at what they said, is it still absolutely certain in your mind that it's a 9000 data point sample run quarterly? They flat out say that the 5% number is based on the "average ... in the samples during each monthly analysis period during the quarter." That implies not only that each quarter is actually 3 monthly periods, but also based on the reference to the average
in a monthly period that each month is actually an aggregation of some sub-unit being tested. So quite literally, what Musk said could actually be true and this language would not be inconsistent with that, however, what you think the Twitter board is saying about a quarterly study would actually be inconsistent with the claims they made here.