Elon Musk said this week he declared the Twitter deal back on at the original purchase price of $54.20, surprising the market but not Delaware law aficionados. This time he promises to abide by his promises to abide by the merger agreement.
Whether it was the upcoming deposition or the threat of spending all day in Synagogue atoning for behavior in the Twitter saga, Musk’s capitulation shows that no matter the size of the deal, the Delaware Chancery Court and the jurisprudence around it is not messing around even if you’re the richest man in the world buying a company on a whim.
Stars were made—looking at you @tulanelaw prof @Ann “No Relation" Lipton and @The Chancery Daily who collectively nailed this case—and billions were won and lost by investors, arbs and others in Elon’s whimsical approach to deal-making.
But as Matt Levine points out, it’s still not that simple for Musk. While the court has postponed the trial, Musk’s original debt financing and an outstanding $33.5b in funding remain in question. The debt financing is made even more complicated for the seven investment banks on the hook amidst surging bond yields. Activist investors Carl Icahn and Dan Loeb were waiting in the wings to reap hundreds of millions in profits after building up stakes as the saga unfolded these past few months.
In the newest feature of Dealmakers in Midtown Getting Coffee, GPP caught up with Breakingviews’ U.S. editor Lauren Silva Laughlin. She was unsurprised by the latest development in Twitter v. Musk. Laughlin said that this end is “fitting” despite all rationality and M&A conventional wisdom.
As for Laughlin’s crystal ball on M&A and IPOs for the rest of the year? “More of what it has been for the last several months, probably because there's no stability in interest rates. Stability in interest rates create a price-finding mechanism where buyers and sellers can then start to match up again. Until that happens, everybody will remain very apprehensive and then that affects valuations for the IPO market.”
Have a great weekend,