Bonus Episode: Elon Pauses Twitter Bid

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Hi, everyone. This is a special emergency episode of Pivot from New York Magazine and the Vox Media Podcast Network.
I'm Kara Swisher.

And my date with Sophia Verdera is on hold, Kara.

It's on hold.

And by the way, my role as lead synthesizer and keyboardist is on hold also with Rufus DeSoul. That is on hold as well.

Also on hold. Good, good.
Because, you know, we'll see what happens. We may sound a little different today.
We couldn't wait till next week. Elon says, the Twitter deal is paused.

Like I said, he would. Thank you very much.

He tweeted this morning on Friday morning, twitter deal temporarily on hold not just on hold but temporarily on hold pending details supporting calculation of spam fake accounts do indeed represent less than five percent of users still committed to acquisition was his second tweet oh my god the bots he's using the bot thing he's using spam as the excuse whatever he wants a lower price spam and bots make up less than five percent of users twitter has said this so he's used he's found a a a hook to hang his little coat on.

What do you think, Scott?

This is total bullshit. He said to his lawyers, I need to get out of this airtight contract.
Find me an escape clause.

And the best they could find was the only way he gets out of this contract, at least legally, is that if he violates or if Twitter's SEC findings are incorrect or not accurate.

And they said, okay, maybe this is not accurate. They claim that approximately 5%.

But the problem is, even if he claims it's not accurate and he proves it's not accurate, he's got to prove to a Delaware court that it caused a material adverse effect.

So, but but this is where, and when I say I read the purchase agreement, basically I read Matt Levine's review of the purchase agreement, who, by the way, is my Yoda on all of this stuff.

But here's the thing.

I don't see how you force an individual to show up with $45 billion.

So which he knows. Which he knows.

And this is the worst thing of all of this, and I'll come back to it.

The worst thing about all of this is that we now have a society where we have said to billionaires, you no longer need to comply with the law. He knows he doesn't need to comply with the law.

Well, I'm going to

interject here. I think he wants a lower price.

When I tweeted this on Monday, which I said, he can't pay this price. He's going to do something here.
I wonder when he's going to drop.

Because Twitter would have dropped like a bomb, dropped right down to the bottom.

Worse than the other tech stocks. And so he couldn't, his price, $54.20, joke as it is, was way too much at this point, including with Tesla shares going down and this and that.

and so the minute i did that a friend of his keith raboy uh i think he's a friend of his um tweeted this is he's going to walk away and then wait for a lower price and then be a hero when he buys it at 15 billion he wants a lower price that's what he's doing he's trying to i don't know why he can't just say the you know things have changed on wall street i want a lower price just pay the billion and then come back um it's a convenient accusation uh to essentially saying twitter's lying to him

yeah but i don't see i mean this board, I would have argued this board accepted,

did not lived up to their fiduciary duty and accepted the offer too quickly to begin with.

But I think if the board lets him do this, then they've totally outed themselves as an ineffective board because he has proven himself unstable, unreliable, and just bringing a lot of volatility.

I think the board, do you really think they're not? But they can't do it. What can they do, Scott?

They can reject the offer, Kara. Yes, yes, they can't.
Well, now they've accepted the offer. They can say, you are no longer a serious

actor. You've wasted enough of our time.
Best of luck to you. Take off.
You couldn't secure the financing. You didn't show up.
Well, he did secure the financing. He has secured the financing.

Okay, hold on. All right.

I can't imagine that his credit, that the people doing this financing have not called and said, well, hold on. What's the upside for us?

What equity investor wants to buy this stock at 54 bucks when it's trading at 40? saying

that you're going to get a business caveat at that price. At that price, things have changed in a week, essentially, or two weeks.
So here's what we said when we recorded yesterday.

As of now, this deal is off. It makes absolutely no sense for Elon Musk.
Can he just sit and wait and then reprice or not? That's the correct question.

For a billion dollars, he has six months to kind of see what happens. He will come up with reasons,

something around woke or conservative, or he will try and reprice the deal. There's a specific performance clause in these deals.

Perfect. So with Twitter going down in price, it's already going down, but as you said, it could go down to what, 20 is what you were saying? A very small amount.

Snoop Dogg tweeted, may have to buy Twitter now. Everyone's going to come in here.
Correct, Svat? I don't think there's a lot of buyers. I think if any, again, this is not.
$15 billion?

No? Here's the thing. What this whole process has done is it's outed how bad a business this is because it's shown the world there were no other buyers.

All the the buyers I thought were out there did not materialize. Right, but that's $45 billion.

It is laid bare to the world that this is a company only doing a billion in EBITDA. And it is exactly the kind of company, quite frankly,

Kara, that would have lost 30 to 50% of its value in the time since he closed the acquisition.

Right, right. I don't think a bunch of suitors come out.

I think a bunch of suitors, anyone with deep pockets right now, is going to go big game hunting for much slower, cheaper prey right now than a social media network.

To not buy Twitter for $50, you don't think the Dan Loebs of the world, the Bill Ackmans aren't going to be looking at this thing at $15 billion over $14,000. We can't get it at $15.
$15 billion.

Well, $15 billion would be a third of where it's now.

Yeah, you're saying someone could close a transaction at $18 a share? That's not going to happen. Yeah.
Well, I can't.

If he leaves, it goes probably down to somewhere in the 20s, and the board tells the management team, as they should, to get back to work. Right.

And not to say, what if he comes in with a $25 price then, if it's down in the 20s?

I can't predict this board's actions, but most boards would say, all right,

we believed your bullshit. We accepted the offer.
We put in place what we thought was an airtight contract.

I think they have a fiduciary duty, if he doesn't show up with $45 billion, to sue him for the $45 billion. He has signed an airtight contract.
He has disrupted the entire organization.

They have stopped listening to other suitors, and they are trying to cooperate with him. They have made all sorts of agreements around sharing information.
He's acting like he owns it.

He's wandering around like a corporate city.

And then they're going to say, no, you can buy it for $30 a share.

I don't think they're going to do that. But again, they've done things I didn't think they were going to do before.

He's also saying they're lying to him about the bots. You know, one bot he hates is Elon Jett, which I love, which tracks it the movements of his private plane.

But this is really interesting that he picked bots. That to me was fascinating.

And even as he was insulting Biden yesterday and talking about, I don't know if you saw, we have a war on straws. He's obsessed with the war on straws.

He would have picked too many snacks in the snack room if he thought that was his best route to try and worm out of this. Yeah.

And quite frankly, this will probably be the one positive thing that comes out of this, and that is there's going to be more scrutiny and examination of a real issue. And that is the bots here.

And not only that, the bots are way more than 5%.

Yeah.

I mean, Twitter has been lying. Which probably knew, which you probably knew.
That's exactly right.

And his lawyer said, if we want to prove a material adverse effect, which is not going to be easy, and we want to not look like what we are, and that is people coming up with bullshit reasons to either retrade or walk.

We have to come up with the least illegitimate excuse. And this isn't even a legitimate reason.
This is the least illegitimate that his lawyers have pointed out to him. And

all of a sudden, he's concerned about bots, who, by the way, are the same bots who have been pumping up Tesla for the last five years. The man knows of bots.
The man knows of bots.

So we're going to have a quick break, and when we get back, I want you to talk where do you think this is going, both of us?

We'll be back with more on Elon's Twitter in our our emergency pivot section.

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Scott, we're back. Okay.
All right. So he's using the bots.
Not a bad, you know, he could use, what else would be good? What other excuses is the next excuse? It's what?

Overestimating users, that kind of thing, right? They're not, I mean, if you look at his, the purchase agreement, he said he he waived his rights to due diligence. Yeah, he did.

I mean, this purchase agreement is pretty airtight, but where I think Matt Levine and other people do get it wrong is they look at an agreement and they pretend or they under the understandable notion that Elon Musk is subject to the same laws as everyone else.

He's not.

He'll start tweeting angry things to the SEC and their lawyers, and you know what Twitter will do? Twitter will say, okay, just take his billion dollars and let's move on. Did they really think?

Because if the purchase agreement says he has to show up with the money, assuming he can get debt financing,

who's going to leave their debt financing in place for the shit show that will be Twitter in the midst of a war where a buyer doesn't want to own it?

At this price during this meltdown, the tech meltdown. Let's keep that in mind.
The purchase agreement says

you can't push them with a shit. That's too big.
$25 billion.

I think he wants to reprice. That's what he's going to try first.
Or walk away and reprice. Or reprice, one or the other.

What does, what, that you think there's no other buyers at the lower price, correct?

Well, it depends how, if the stock were to, I believe that if the stock were, if this hadn't happened, if there was, if this, this company had just traded to its natural level, if you look at what has happened to everything else and you look at where he started buying shares at 32,

it's hard to imagine this company wouldn't be in the low 20s, which puts it at about 27 billion,

which means, I'm sorry, puts it at about 22 billion, which means you need 30 billion to take it out. I think in this environment, there are very few buyers.

All of the buyers are also looking their wounds. Salesforce is down.
Disney is down. Yeah.
And they probably see a lot of different opportunities. The opportunity set is so big now.

So Elon is the only buyer. And by the way, as Andrew Rosorkin and others noted on our Shorter Spaces last night, which you were on,

this guy could transform it. I don't know why he's playing all these games.
He certainly has the ability. He should just reprice and try to buy it.
I stick with my original notion.

You think he's not going to buy it?

I think, okay, this is, look what's happened here. He announces he's buying it.
The stock steadily loses Tesla.

His golden goose steadily loses 20%.

He announces he's not maybe not buying it. He's trying to worm out of it.
What happened to Tesla stock? Tesla went up. Yep.
Went up. So

connect the dots. This guy doesn't want it.
This guy doesn't want this thing. I don't know.
I don't know. He has woken up from his consensual hallucination with a hangover.

I'm like, how do I get out of this? And I just don't think the board or the employees are going to go, wait, you're letting him reprice it. And then is he going to walk away again and demand more?

Yep, yep, yep. Well, he could.

The last thing, SEC, where are they?

Where is the SEC? They were, of course, looking at the disclosure issue. Does this raise any regulatory issues in terms of whatever the heck he's doing?

He does everything in plain sight, so maybe not.

Or is there any kind of, you know, he is not, but he does not.

Someone wrote me, a big investor, is like, like we said, Elon is not, like he said, he's not scared of the SEC. Well, he shouldn't be, correct? I mean, there's no

repercussions here. Maybe lawsuits.
He doesn't care, right?

The best thing that's going to come out of this is that Twitter will get long overdue scrutiny about the sewer that is the feces that makes up the sewers here, which is anonymous accounts and bots, of which, by the way, Elon Musk and Tesla have been some of the biggest, and Tesla stock have been some of the biggest beneficiaries of.

If this does anything to highlight that problem and start the road to cleaning it up, that's a good thing.

The worst thing about this, in addition to the distraction of management and a distraction of our attention for much more important issues, is that this does nothing but cement the basic notion in our society that billionaires are, and especially innovators, are not subject to the same laws as everyone else.

Yeah,

that is true. He can do whatever he wants.
And by the way, let's get on this straw issue. The straws.

And then he used it for virtue signaling to the right, which was interesting. All right, Scott.
Any print? So you think he's out. I think he's repricing.
Is that correct? Is that the correct?

I don't know if he's trying to reprice, but I think he's effectively out because I think the Twitter board and management, I think the board would be under such fire from management if they said, you're really letting him do this.

You're letting him walk away again. You're going to let him walk away and come back and fuck with us for another six months.
Yeah. Yeah.

I just think the board has to show some sack here and say, and legitimately say, sorry, boss, you are no longer a credible acquirer. Yeah.
Yeah. Well, that could be.
That could be.

He could get up to 15%, though, with a lower price, too. He could make a lot of trouble for them.
Here's the thing. Ignore his screaming, I suppose.

He's very loud, and he's got loud followers, but you can ignore him, board of Twitter, or you could just take the bid and admit what you've done.

He backed you into a corner, he has all the leverage, and now you're paying the price for you. You know what I would do if I were Twitter?

If I were the board, if this didn't work, I'd kick him off the platform. I'm just so sick of hearing this bullshit notion around First Amendment and free speech.
I would say

if someone was, if an outside investor,

if an outside investor was wreaking havoc with Vox

and constantly distracting management, we would kick them off the platform. No, no, no.
I'm going to give you a no on that one. That's what I'm saying.
Oh, I don't think they will.

That's what I would say. It's an indulgence.
It's ridiculous. How about ignore? How about mute? There's a thing called a mute.
That is their only leverage, Kara. They should threaten it.

We are contemplating kicking off the platform. We're a private company.
I'm just kidding. You could contemplate it if you had backbone, but they do not.

They are aware of that. Okay, I'm talking about if I were on this board, I'd be like, our only leverage here is to say, you know what, Fosta, we're kind of sick of you.
We're a private company.

You can scream First Amendment. This has nothing to do with the First Amendment.
Yeah. Yeah.

We're sick of you damaging shareholder value. We're going to kick you off the platform and you can scream at us off of

Getter or Rumble or Fortune. All right.
I think he wants it. I still think he wants it.
I just do. We'll see.
We'll see. But it's a lot of jazz hands from Elon Musk.
Jazz hands.

That's what's happening today, everybody. And I agree with him on straws.
By the way,

my plans to pee just two times a day and have the flow of the Canadian side of the Niagara Falls are on hold, Kara. All right.
They're on hold. Okay, Scott.
Thanks. I got to go.

Thanks for this special update. As usual, Pivot brings you the news now because we are working for you, our audience.

I wish people could see me. I'm dancing.
I got a little bit of rhythm. Dancing.
Be sure to follow us on Twitter, of course. Follow us on Twitter.
And you know what?

Let's give a big thank you to Elon Musk. We really appreciate the content.
We'll be back on Tuesday for a regular episode unless he does something else like goes to Mars. I don't know.

Read us out, Scott. Today's show was produced by the regular cast of characters who demonstrate constant agility and humor us, and we appreciate your good work and effort.

Everyone, have a great weekend.

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