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Elon Musk buys Twitter for $44 Billion
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Old 14-05-2022, 11:22   #46
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Re: Elon Musk buys Twitter for $44 Billion

Yawn. A pox on Twitter, a bigger pox on Facebook.
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Old 14-05-2022, 12:05   #47
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Re: Elon Musk buys Twitter for $44 Billion

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Originally Posted by Damien View Post
It is but this is what is done as part of due diligence before you commit to buying. It's weird he is at this stage and now he suddenly wants to do it.
Not at this scale of purchase. Due diligence can be highly complex and can’t be hidden, nor can it be done when the potential purchase becomes public and the market is all ‘will they won’t they’. That sort of volatility is undesirable and likely to attract unwelcome attention from the market authorities. If you keep people guessing about whether a purchase will go ahead, eventually it starts to look like share price manipulation.

Any offer to make a very large purchase is subject to due diligence. We all do it at some time in our lives - a house purchase offer is always subject to satisfactory surveys. Even if the home report is available from the outset, various other searches have to be done and in some cases special surveys of the electrical or gas systems may take place.

Back in the day when I worked for a major international hotel company, it announced an agreed offer to purchase a large regional hotel chain which itself had well over 100 hotels. For the next 3 months, every senior executive in the place was on the road, visiting every single one of the hotels to establish that they were all there and in satisfactory condition.

Obviously there are certain things that you can, and should, satisfy yourself about before you make the offer, but there’s plenty that you can’t - especially proprietary details that the company being bought can’t and won’t give out to just anyone.
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Old 14-05-2022, 14:07   #48
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Re: Elon Musk buys Twitter for $44 Billion

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Originally Posted by Chris View Post
Any offer to make a very large purchase is subject to due diligence. We all do it at some time in our lives - a house purchase offer is always subject to satisfactory surveys. Even if the home report is available from the outset, various other searches have to be done and in some cases special surveys of the electrical or gas systems may take place.
Elon Musk skipped it though, he has committed to buying Twitter unless something major happens. He hasn't made an offer pending due diligence, he waved that right already and signed the deal: https://news.sky.com/story/elon-musk...-flap-12612206

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It is the sort of issue that might have been addressed in due diligence - the process by which buyers and their banks closely examine the company they are acquiring - had Musk not waived that step in order to hustle the Twitter board into a swift decision on his offer.

There is a good breakdown here of why this 'on hold' story is yet more Elon Musk showmanship: https://www.bloomberg.com/opinion/ar...trolls-twitter

Quote:
“Temporarily on hold” is not a thing. Elon Musk has signed a binding contract requiring him to buy Twitter. Legions of bankers and lawyers and Twitter employees and special-purpose-vehicle promoters are working to fulfill his legal obligation to get the deal closed. “The parties hereto will use their respective reasonable best efforts to consummate and make effective the transactions contemplated by this Agreement,” says the merger agreement. (Section 6.3(a).) He can’t just put that “on hold.”

That contract does not allow Musk to walk away if it turns out that “spam/fake accounts” represent more than 5% of Twitter users. We discussed this last month, when Twitter admitted in a securities filing that it had (slightly) overestimated its daily active users for years. The merger agreement contains a provision that allows Musk to walk away if Twitter’s securities filings are wrong — and this 5% number is in its securities filings — but only if the inaccuracy would have a “Material Adverse Effect” on the company. (See Sections 4.6(a) and 7.2(b).) That is an incredibly high standard: Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No.
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