Summing up the possible outcomes of Elon Musk’s increasingly rancorous offer for Twitter would easily bust the limit of a 280-character tweet.
Tesla’s chief said on Friday he was backing out of the $44bn deal to buy the social media company, accusing it of disclosing “false and misleading” information about the number of fake and spam accounts.
Withdrawing would usually mean paying a break fee, or a $1bn “reverse termination fee” in this case, but Musk’s lawyers gave other grounds for abandoning the deal (discussed by Alphaville) that suggest he may be trying to avoid such a penalty. Then again, this could be a gambit to buy Twitter at a lower price — his $54.20 a share offer is looking expensive, with the stock falling nearly 10 per cent on Monday to $33.29.
The other complicating factor is Twitter’s response. As we reported last week, the company and its CEO Parag Agrawal are becoming more combative. If closing conditions are met, Twitter can seek to make Musk go through with the deal. US courts have historically sided with sellers in legal battles when buyers try to terminate deals, in order to discourage acquirers from walking away on spurious grounds.
Twitter’s chair, Bret Taylor, responded swiftly to Friday’s filing, saying the board was “committed to closing the transaction on the price and terms agreed upon with Mr Musk” and would pursue legal action to enforce the agreement. Twitter is understood to have instructed the elite San Francisco law firm Wachtell, Lipton, Rosen & Katz to file its lawsuit with the Delaware Court of Chancery early this week,
Legal experts say he faces an uphill challenge there. “I think we are finally going to see if Elon Musk is ‘above the law,’” said John Coffee of Columbia Law School. “I am confident that in the Delaware courts the answer is no. The law is fairly clear that you cannot pull out from a deal in the manner he is seeking.”
Financial analysts fear Twitter’s stock could fall further if Musk decides to sell down his near 10 per cent stake in the company. That might not constitute a huge loss for him after paying around $36-$37 per share. Morningstar analysts say he should hold on to his shares, given the current uncertainty. Still, they don’t rule out him selling to another party interested in either acquiring Twitter or taking an active shareholder role in the company.
The Internet of (Five) Things
1. Chip deal struck for Europe
Chipmakers STMicroelectronics and GlobalFoundries are teaming up to build a semiconductor manufacturing plant near Grenoble, France, receiving subsidies as part of Europe’s bid to become more self-sufficient in chips. The output will be general purpose rather than cutting edge, with chip circuit widths of 18 nanometres or above.
2. Klarna completes down round
The buy now pay later pioneer, once Europe’s most valuable private tech company, has had its valuation slashed from $46bn to $6.7bn in an $800mn funding round announced on Monday. Michael Moritz, chair of Klarna and a partner at investor Sequoia, blamed “investors suddenly voting in the opposite manner to the way they voted for the past few years”.
3. Truphone buyers query last-minute UK probe
The prospective buyers of UK telecoms group Truphone, which is owned by Roman Abramovich and Russian associates, are challenging the British government’s decision to block the deal on the eve of its closing, while it conducts a national security probe.
4. The Uber files
A new leak of records from 2013 to 2017 reveals the inside story of how the ride-hailing company muscled into new markets such as France and the UK and enjoyed a cosy lobbying relationship with governments.
5. 5G in space
A consortium of three telecoms, tech and defence groups is planning to take 5G into space by developing a satellite network that could enable smartphone users to wirelessly access superfast speeds and low latency wherever they are in the world. Ericsson, Thales and Qualcomm are testing how a 5G network could work using low-Earth orbit (LEO) satellites.
Tech week ahead
Astronomers this week will reveal images of the oldest and most distant galaxies ever seen with the release of the first observations from the world’s costliest and most ambitious telescope. The initial findings from the James Webb Space Telescope will show five early scientific observations including an analysis of the atmosphere of a planet orbiting a distant star. President Joe Biden will release one of the pictures at the White House on Monday evening. The others will be released on Tuesday afternoon.
Tuesday: Amazon’s two-day Prime Day sales event begins, with sales worth more than $12.5bn expected — an increase of 17 per cent from last year, according to research group Insider Intelligence.
Thursday: Earnings from chip foundry TSMC may provide more insight into the state of the supply-demand imbalance in semiconductors.
Tech tools — Solar-powered golf
Caddies beware: the MV2 might have one-upped you as the ultimate golfer’s companion, writes Jamie Waters. Rendered in black or white microsuede (a waterproof synthetic), this $259 golf bag may look understated but it comes with all the tech-y trimmings. It has a solar panel that’s connected to a phone charger, an insulated thermal pocket to keep drinks chilly, and surprisingly punchy Bluetooth speakers for those who like to putt to a beat. The speakers last an impressive eight hours. It’s the work of MNML, a golf-kit start-up from sunny Redondo Beach, Los Angeles, which has also taken care of the basics: it fits 14 clubs and has four dividers, a built-in stand, and pockets with snappy magnetic closures. It’s one of five sports gadgets featured by HTSI.
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