Bonus Episode: Elon Musk v. Twitter — with William Cohan

Exit Strategies

Scott Galloway and William D. Cohan explore the potential exit strategies Elon Musk might employ to back out of his Twitter acquisition deal. They discuss the billion-dollar breakup fee and the specific performance clause that could legally compel Musk to complete the purchase, despite his reluctance to pay the original price of $54.20 per share 1. William notes that while courts have enforced such clauses, the magnitude of this deal and Musk's wealth make it unprecedented 2. Scott argues that Musk's actions have devalued Twitter, creating chaos and uncertainty among its leadership and employees 3.

I don't think you can physically force someone to show up with 45 billion, but you could technically say you failed to show up. You owe the company 45 billion.

--- Scott Galloway

The discussion highlights the complex legal and financial dynamics at play in this high-stakes corporate drama.

   

Financial Maneuvering

The financial tactics Musk might use to navigate the Twitter deal are scrutinized, focusing on his equity and loan arrangements. William points out that Musk has pledged Tesla stock as collateral, complicating his ability to secure additional equity 4. The $27.5 billion equity hole remains a significant hurdle, with Musk yet to explain how he will cover the $14 billion shortfall 5. William suggests that Musk might use the inability to secure financing as a potential exit strategy, although this could damage his reputation on Wall Street.

The equity hole of 14 billion is legit and real, and he hasn't come up in the last couple of weeks with any more investors here.

--- William D. Cohan

The conversation underscores the precarious nature of Musk's financial maneuvers and their implications for the deal's outcome.

   

Board Interactions

The interaction between Musk and the Twitter board is fraught with tension and strategic calculations. William explains that the board views Musk's initial offer as a windfall, but any significant price reduction could lead to shareholder lawsuits and reputational damage 6. The board is prepared to enforce the original contract, yet they might consider a reduced offer if it remains within a "band of fairness" 7. Scott highlights the board's dilemma, balancing the potential benefits of a lower offer against the risk of appearing weak or unfair.

If he becomes a total asshole and tries to do something like in the threes, like where the stock is trading now, then the board's going to walk away and tell him to go pound sand.

--- William D. Cohan

This section reveals the intricate power dynamics and strategic decisions facing the Twitter board as they navigate Musk's unpredictable moves.