My friend Columbia University Law Professor Jeff Gordon sent along some thoughts on the Elon Musk's fight with Twitter and gave me permission to post them as a guest post:
I've been thinking about settlement possibilities. It's now a kind of baseball arbitration, with choices between $1 BB and $44 BB. As to settlement: I think the problem is going to be whether the Board can get out of what might be called the Revlon "box." The $$ payout necessary to make Twitter whole in a financial sense is very large, $20 billion? I haven't done the math. It's this odd circumstance where the Board could have refused to sell to Musk on the grounds of some "public" value to Twitter ex Musk (perhaps with some dubious claim about maximizing long term value) but Revlon narrowly applied seems to say they (ie, board in fulfilling its fiduciary duty) can't do a "nevermind" to unwind a friendly sale to restore status quo ante.
[$54/sh - standalone value (less than $37/sh which includes chance that deal goes through at a price higher than $37] x # shares outstanding.]
I see that Ch McCormick is the judge. Bad news for Musk, I think, since she is unlikely to go off on some doctrinal fancy. The straight down the middle analysis favors Twitter.
A further thought: I think the key to specific performance will in the end be the financing conditions. If I were a merger arb I will be looking very closely at those agreements. If the banks have a legit basis to walk, then I think we are in the realm of Alliance Data Systems Corp v. Blackstone Capital Partners, in which parties are held to the terms of their deal structure.
