Twitter Pines for Strine, Delaware Thanks Musk for Spike in Searches, “Where is Wilmington?” |
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Amid mid-July somnolence in the M&A market, dealmakers were excited for the Twitter lawsuit against Elon Musk to drop to have something to kibbitz about other than the lack of deals. Its notoriety even made it into The Daily.
The lawsuit against Mr. Musk, who knows his way around Delaware courts from his Solar City lawsuit days, had a bit for everyone, including what may become the most famous poop emoji in corporate law. (Page 33)
Twitter first homes in on good old-fashioned stock manipulation by Musk, who has already been called out for flouting SEC ownership disclosure rules. “Between March 24 and April 4, over 112 million Twitter shares traded in ignorance of Musk’s mounting ownership,” the suit reads.
While much of the suit was based on what Musk himself said—the illegal stuff was said out loud, on Twitter—it also recounts Mr. Musk slow-walking decision-making, missing meetings he asked for, hiring and firing his own team members, and generally throwing sand into the gears of the transaction.
Commentators weighed in specifically around the seller-friendly “specific performance” provision and whether a judge would force a buyer to go through with a $44 billion transaction they don’t want to own. Putting the dollar amount aside, Chancellor Kathaleen McCormick—expected to be the jurist on this case—did just that in a recent case, DecoPac Holdings, Inc. v. KKR, after the buyer got remorse. So did former Chief Justice Leo Strine in IBP v. Tyson Foods.
The lawsuit isn’t dry and indeed reads like a pilot for a Hulu spoof of a tech gazillionaire. The “disparaging tweet” referenced and reprinted in the suit refers to the infamous and juvenile poop emoji Musk tweeted in response to Twitter CEO’s explanation of spam bots.
Said Matt Levine of Money Stuff about said emoji, “If this case does not settle and ends in a landmark Delaware Chancery Court decision, that poop emoji had better be in the opinion. All corporate law casebooks had better have that poop emoji.”
As practitioners read through the lawsuit, there was a lot of chatter about what happens if Musk loses and he doesn’t abide by the judge’s order to close the deal. Matt said Musk was unlikely to end up in Chancery Court jail. CNBC’s Faber said maybe he would, which raised eyes among his co-anchors.
Have a great weekend,
GPP Team
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The Daily: Can Elon Musk Get Out of Buying Twitter?
The New York Times podcast that is not typically a business-focused listen, brings in technology reporter Kate Conger to breakdown the latest drama between Elon Musk and Twitter. Listen Here
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Bloomberg Opinion: I Was Told There’d Be a Cake Merger
Money Stuff’s Matt Levine uses the recent example of KKR v. DecoPac Holdings to illustrate what might happen when a buyer (KKR) tries to renege on a deal–spoiler, not the desired outcome for KKR. Read More
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Twitter v. Elon Musk: Let’s Look at the Lawyers
Twitter and Elon share one thing in common — “legal dream teams,” with Wachtell Lipton for Twitter and Skadden Arps in Musk’s court. Read More
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Elliott Sets Sights on Pinterest
The activist investor has built up more than a 9% stake in Pinterest, report Jessica Toonkel and Sarah E. Needleman. Read More
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Financial Times: Merger Arbitrage Funds Go Hunting as Corporate Deals Come Under Threat
“The combination of a slowing economy, increased regulatory scrutiny and the challenge of executing highly leveraged transactions in skittish debt markets is forging opportunities for such specialist Wall Street funds.” Read More
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Freshfields: Trends and Updates from the 2022 Proxy Season
Record-breaking number of shareholder proposals, emergence of an ESG counterpoint and an increase in “vote-no” campaigns are among Freshfields top takeaways from this year’s proxy season. Read More
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Lex Column: Trian: UK Activist Holds Up Unflattering Mirror for Peltz
The activist vs. activist campaign is heating up in the UK as Global Value Fund leads a group of other investors that aims to replace most of Trian Investors 1’s Board. Read More
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The Deal: Fewer M&A Campaigns, More Insurgencies in H1
According to Lazard’s first-half activism report for 2022, the number of activist campaigns globally was higher than the previous three years, but activism focused on M&A was considerably down. Also, Elliott Management is in the lead for most campaigns launched this year. Read More
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Reuters: Spirit Airlines Plans to Delay Frontier Deal Vote to July 27
For the fourth time, Spirit Airlines announced it is moving the shareholder vote on its merger deal with Frontier Group Holdings to late July. Read More
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Page Society: Stakeholder Capitalism and ESG
The Page Society’s new guidebook tailored for CCOs helps inform decision-making when considering the needs of employees, customers, institutional investors and more. Read More
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Wall Street Journal: Businesses Urge SEC to Consider Mergers in Climate-Disclosure Rule
Some companies are saying the SEC’s proposed climate-disclosure rule could make mergers or acquisitions less appealing for dealmakers if they have to report carbon emissions and, in certain cases, those of their suppliers and customers. Read More
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Wharton Business Daily: Texas Fought Against ESG. Here’s What It Cost
Daniel Garrett, Assistant Professor of Finance at the Wharton School, talks about the impacts states (in this case, Texas) face when they boycott financial institutions over their ESG policies. Listen Here
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Harvard Law School Forum on Corporate Governance: Board Diversity Action Expands to Courtrooms, Regulators, and Investors
Matthew Fust, a board member for several publicly traded companies, goes in-depth on the current board diversity landscape and what has changed since the passing of California’s landmark 2018 legislation requiring gender diversity on the boards of public companies. Read More
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FROM OUR DESK TO YOURS
It was an exciting week in the GPP offices as we welcomed David Gelles, New York Times writer and author of “The Man Who Broke Capitalism”. His book argues that Jack Welch, former CEO of General Electric, ushered in an era that altered corporate America, ultimately for the worse. Our conversation centered around if Welch's method of mass layoffs and whirlwind dealmaking were precursors for GE's later misstep; if Welch was the cause or simply reacting to a changing global economy; and whether 'Neutron Jack' would have survived for so long in today's corporate environment.
On our watchlist, ‘The Boys,’ the latest season of Amazon Prime's raunchy hit show satirizing superhero culture and consumption, is back, this time with surprise musical numbers and even discussions on EBITDA margins and corporate governance trends.
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PEOPLE MOVES
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Sonia Syngal, president and chief executive officer of Gap Inc., has stepped down from her role and the company’s Board. Read More
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Tom Krause, president of Broadcom’s software group, has left the company. Krause was a key player in negotiations with VMWare – one of the biggest technology deals in history. Read More
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Eli Gross and Simon Smith will become the new co-heads of the dealmaking division at Morgan Stanley. Current bosses, Mark Eichorn and Susie Huang, have been elevated to executive chairs of the division. Read More
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Anjli Raval has returned from maternity leave with a new role. She is now the Financial Times Management Editor covering boards, corporate governance and companies around the world. Read More
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Jared Cohen, former senior Google executive, has been hired by Goldman Sachs to co-head the newly created innovation group. Read More
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