Elon Musk will attempt to terminate his agreement to buy Twitter

Yesterday the Washington Post reported that Elon Musk had “stopped engaging in certain discussions around funding for the $44 billion deal” and that the deal was in serious jeopardy, so this news isn’t out of the blue.

Twitter shares were down 5.35% on the report today and closed at $34.84 — far below the $54.20 agreement. For more than a month, there have been signs that Musk has a bad case of buyer’s remorse.

What’s far less clear is that he will be able to walk away from the deal.

He accused Twitter of being “in material breach of multiple provisions” of the  merger  agreement.

“Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement)”

However he signed an agreement to complete a purchase of Twitter. It wasn’t an agreement to think about buying Twitter and the social media company has said it will enforce the deal.

Delaware courts, where this will be adjudicated, have been consistent in ruling that the bar for breaking a merger agreement is extraordinarily high. Musk has said the bot count is too high but Twitter this week released a presentation saying it was below 5%. Legal expert say that even if it was 20% it will be tough to argue it’s a material adverse clause. (more…)

US major indices close the day with mixed results

A look at the final numbers shows:

  • Dow industrial average fell -46.4 points or -0.15% at 31338.16
  • S&P index fell -3.26 points or -0.08% at 3899.37
  • NASDAQ index rose 13.97 points or 0.12% at 11635.32
  • Russell 2000 fell -0.23 points or -0.01% at 1769.36

For the trading week all the indices were higher led by the NASDAQ index:

  • Dow industrial average rose 0.77%
  • S&P index rose 1.94%
  • NASDAQ rose 4.56%
  • Russell 2000 rose to 2.22%

Looking at the Dow 30 this week, the gains were led by:

  • Nike, up 6.67%
  • Apple up 5.84%
  • Intel up 4.54%
  • Salesforce up 4.34%
  • Microsoft up 3.11%

The Dow losers this week included:

  • Walgreens, -2.62%
  • Chevron -2.55%
  • Verizon -2.23%
  • Coca-Cola -1.93%
  • Travelers -1.27%

Some big gainers this week included:

  • Beyond Meat, +24.51%
  • Rivian, +24.47%
  • Celcius, +18.94%
  • Chewy, +18.66%
  • Roblox, +17.79%
  • Moderna, +17.53%

Some big losers this week included:

  • Raytheon, -17.17%
  • Phillip Morris -5.5%
  • Schlumberger, -3.73%
  • Twitter, -3.71%
  • Lockheed Martin -3.04%
  • Wynn resorts -2.96%
  • Chevron -2.55%
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