Twitter has filed a lawsuit in Delaware against Elon Musk because he no longer wants to buy Twitter. For those following this saga, it's worth catching us all back up on what has gone before because it's hard to remember or even keep track of it all. So, "previously on Elon Musk Buys Twitter."
March 14th - Elon Musk bought 9.2% of Twitter's stock make him the largest individual shareholder and the second largest overall shareholder behind the Vanguard Group.
March 24th - Musk tweeted a poll asking if Twitter's algorithm should be open sourced
March 25th - He asked if people thought the platform "rigorously adheres" to free speech.
March 26th - He asked if a new platform was needed.
April 4th - Musk disclosed in an SEC filing that he had purchased that much Twitter stock. And hat tip to Wedbush analyst Dan Ives, who told CNBC that the purchase “could lead to some sort of buyout."" This was longer than the 10 days normally required to disclose the stake.
April 5th - Twitter offers Musk a seat on the board. In exchange he would limit the amount of stock he would acquire to 14.9%, agree to take part in strategic decisions but not on moderation policies. That same morning Musk said he would not join the board.
April 10th - CEO Parag Agrawal told employees (and then said publicly) that Musk would not join the board.
April 11th - Musk amended an SEC filling to remove the mention of the share purchase limit and add the idea of "potential business combinations and strategic alternatives" In other words now he was free to buy a larger stake in Twitter and even discuss buying it.
April 12th - Twitter shareholder Marc Bain Rasella filed a class action suit claiming Musk took too long to disclose his initial stake
April 14th - Elon Musk offers to purchase Twitter for $54.20 a share (around $43 billion) He called a "best and final offer" and said he would reconsider his existing stake int he company if it was declined.
April 15th - Twitter adopts a "poison pill" strategy that gave existing shareholders the ability to buy additional shares at a discount to dilute Musks ownership stake and prevent a hostile takeover. This did not mean Twitter didn't want to be acquired so much as it meant they wanted to negotiate the terms if it was acquired by Musk or anyone. At the time, the New York Post and Bloomberg both reported that private equity firm Thoma Bravo was working on a possible bid for Twitter as well.
April 21st - Twitter had still not responded to Musk's offer. Musk filed with the SEC that he had arranged financing to tender an offer directly to shareholders. Something that would spark the poison ill to go into effect.
April 25th - Twitter accepts Musk's offer to purchase Twitter at $54.20 per share, above what it was trading at. He waived due diligence and agreed to a "specific performance" clause which gave Twitter the right to sue if he didn't follow through with the deal. Both sides a greed to a $1 billion breakup fee should the acquisition fail to close. Twitter would have to pay it if it decided to sell tis omeone else or if its shareholders voted against the deal. Musk would owe the amount if his financing failed or if regulatory reasons prevented him from closing.
April 29th - Reuters reported Musk had secured loans to make up about half the purchase price by promising to cut costs.
May 5th - Larry Ellison, Sequoia and Binance all committed funds to invest in Musk's acquisition. Binance chief executive Changpeng Zhao told the Financial Times his crypto exchange would offer Elon Musk ""a blank cheque."
May 13 - Elon Musk tweeted that his deal to acquire twitter was "temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users." Twitter claimed that number in its SEC filing He followed that post with another that said "Still committed to acquisition."
May 16th - At an event in Miami Musk said a deal at a lower price wasn't "out of the question."
May 17th - Musk tweeted again that Twitter needed to convince him of the accuracy of its spam/bot percentage. A SparkToro report estimated the number at 19% but counted legitimate automated accounts like those form news companies that autopost their own headlines. Musk cited a figure of 20%.
Twitter issued statement saying it is committed to "completing the transaction on the agreed price and terms as promptly as practicable.”
May 26th - Twitter shareholders file another class-action lawsuit alleging violation of California corporate laws and market manipulation.
June 8th - Twitter granted Musk access to its firehose of data. They had already given him their methodology which Musk found insufficient.
June 16th - Musk meets with Twitter employees to answer questions and says nothing particularly surprising for a someone about to buy a company.
July 8th - Musk sent a letter to Twitter saying he would not proceed with the acquisition because of Twitter's “materially inaccurate representations" and that Twitter "failed or refused" to provide relevant business information regarding spam accounts. He is pursuing the idea of "material adverse effect" which allows him to break a contract without penalty if he cane prove that Twitter's actual business differs dramatically from what he agreed to buy. However the SEC filing did not include evidence that he number was wrong, only an assertion hat Musk has "reason to believe" that it is "substantially higher" than Twitter claims.
Twitter hired the firm Wachtell, Lipton, Rosen & Katz, whose founder Michael Lipton is credited with inventing the "poison pill" defense against hostile takeovers.
July 12th - Twitter filed a lawsuit against Elon Musk in the Delaware Court of Chancery thatMusk violated the "specific performance" clause of the contract.
July 13 - Hindenburg Research ( noted short seller) has taken a long position on Twitter, raising the stock price. Hindenburg said it believes Twitter's lawsuit poses a "credible threat to Musk's empire."
Yeah other than weird tweets I don't see any actual evidence that Musk is irrational. So I find it unlikely that he is just trolling Twitter. There's definitely a "clever plan" flavor to the whole thing and I wouldn't discount some kind of "so crazy it just might work" sort of thing at play here. What that is? I, personally, could not guess. Maybe it's that he wants Twitter but now wants it cheaper. Maybe he wanted Twitter but then got a good look at its books and changed his mind. Maybe the drop in Tesla stock was much more unexepcted. Any of those seem possible to me.