Credit…Jim Watson/Agence France-Presse — Getty Images
‘In limbo for longer’
Elon Musk won a partial victory yesterday when Delaware’s Court of Chancery agreed to delay the trial over his Twitter takeover bid by a week and a half, until Oct. 28. That gives Musk some important tactical advantages in his monthslong battle with the social media company.
Musk gains some breathing room. Even as Twitter opened settlement talks with Musk, the company was still preparing for trial. That’s because it does not fully trust him to follow through on his word and buy the company. In its filing Thursday, Twitter’s lawyers said a representative for one of the banks lending to Musk had testified Musk had yet to tell the bank that he plans to close the transaction. He also had not given a closing date.
(The stay also likely puts off a planned deposition of Musk that was widely seen as a potential problem for the billionaire.)
Musk says Twitter is the one getting cold feet. That’s the big “plot twist!,” he told his 108 million Twitter followers yesterday. Musk’s lawyers, too, added further intrigue. “Twitter will not take yes for an answer,” Musk’s lawyers wrote in their brief arguing the threat of trial impedes his progress, adding that “a trial would keep the merger transaction in limbo for longer.”
Three more weeks is an eternity, Twitter contends. Musk has had commitment letters from the banks since April. While there’s paperwork to be done, the company says the procedural portion can all be accomplished in a week. Twitter also thinks the banks don’t actually need to “syndicate” the debt — that is, sell on the loans they’re issuing to finance the deal — prior to closing. However, the banks may still do so.
Twitter’s upside: If you take Musk at his word, he is trying to close the deal. “Just when I thought I was out, they pull me back in,” he tweeted yesterday, using a meme from “The Godfather: Part III.” Assuming Musk is in a quiet period before Tesla’s earnings on Oct. 19, the extension could also give him time to sell more Tesla shares to help fund the bid.
Twitter’s downside: If you don’t trust Musk’s intentions — and he has given plenty of reason not to — it gives him more time to find a way to scupper the deal. Perhaps tellingly, Musk included a footnote in a filing requesting to stay the trial that spells out a worst-case scenario: the debt financing falls apart, and Twitter’s lone recourse would be to collect the $1 billion breakup fee.
Investors don’t seem to be optimistic at the moment: Twitter’s stock closed at $49.39 yesterday, 8.9 percent below the $54.20-a-share deal price.
HERE’S WHAT’S HAPPENING
President Biden’s surprise marijuana moves lift the cannabis industry. The president pardoned thousands convicted of marijuana possession under federal law and announced a review of the drug’s legal status. Shares in cannabis companies like Canopy jumped on the news.
The U.S. weighs its options after OPEC Plus’s big oil production cut. Lawmakers are planning bills that would break up the oil cartel or begin dispute proceedings at the W.T.O. For now, President Biden is planning less combative moves like releasing more oil from the United States’ reserves.
What Happened to Elon Musk’s Twitter Deal
A blockbuster deal. In April, Elon Musk made an unsolicited bid worth more than $40 billion for the social network, saying he wanted to make Twitter a private company and allow people to speak more freely on the service.
The response. Twitter’s board countered Mr. Musk’s offer with a defense mechanism known as a “poison pill.” This well-worn corporate tactic makes a company less palatable to a potential acquirer by making it more expensive to buy shares above a certain threshold.
Securing financing. Though his original offer had scant details and was received skeptically by Wall Street, Mr. Musk, the world’s wealthiest man, moved swiftly to secure commitments to finance his bid, putting pressure on Twitter’s board to take his advances seriously.
Striking a deal. With the financing in place, Twitter’s board met with Mr. Musk in April to discuss his offer. The two sides soon reached a deal, with the company agreeing to sell itself for $54.20 a share — roughly $44 billion in total.
Tensions arise. Not long after Mr. Musk and Twitter reached their agreement, problems began. Mr. Musk threatened to pull out of the deal if Twitter did not provide more information on how it calculates the number of fake accounts. In June, the company announced that it planned to give him access to a large swath of its data.
Musk backs out. In July, Mr. Musk announced that he was terminating the deal, citing the continuing disagreement over the number of spam accounts. Twitter then sued the billionaire to force him to go through with the deal. But Mr. Musk fired back in a legal filing, arguing that the company concealed the true number of fake accounts on its platform, accusing Twitter of fraud.
Preparing for trial. Lawyers for both sides have issued more than 100 subpoenas ahead of a trial that was expected to start in October, mostly targeting tech VIPs. In September, a judge ruled that Mr. Musk could amend his suit to include accusations from a former Twitter security chief who claimed that the company misled the public about its security practices.
A surprise move. On Oct. 4, Mr. Musk proposed a deal to acquire Twitter for $44 billion, the price he agreed to pay for the company in April. An agreement at the original price, which would be a victory for Twitter, could bring to an end the acrimonious legal fight. The judge overseeing the case granted Mr. Musk’s request to postpone the trial, giving him more time to settle his financing.
The Bank of England says it saved British pension funds from doom. The central bank told U.K. lawmakers that its program to buy up government bonds prevented a “spiral” of forced selling that could have wiped out many of those funds.
Peloton lays off 500 more employees. The cuts, which amount to 12 percent of Peloton’s workers, are the latest effort to revive the home fitness company’s fortunes. (In a memo to employees, Peloton’s C.E.O. rued briefing The Wall Street Journal on the move, saying it cast a negative slant on the company’s health.)
Check out Hard Fork. In the inaugural episode of The Times’s new tech podcast, Kevin Roose (a DealBook alum) and Casey Newton debate why Elon Musk may buy Twitter after all. Then they step into Meta’s metaverse with The Times’s Kashmir Hill.
The latest headache for chip makers
Earlier in the pandemic, the problem for chip companies was supply-chain disruptions that made it hard for them to get their products to customers. Now, top producers — and their share prices — are being hammered by a starkly different sort of issue: lack of demand.
Consumers are buying fewer computers and other electronics. That’s led to a stream of warnings, with Samsung reporting this morning a 32 percent drop in operating profit and AMD releasing third-quarter sales figures that were $1 billion off its own estimates. The bad news had knock-on effects for stocks across the semiconductor industry. As of this morning, at 6 a.m. Eastern:
Samsung was down 0.2 percent at closing
TSMC was down 2.9 percent at closing
AMD was down 5.1 percent premarket
Intel was down 2.2 percent premarket
Qualcomm was down 1.2 percent premarket
The Fed’s America-first inflation policy
U.S. and international officials are increasingly worried that the Federal Reserve’s efforts to tame inflation may cause economic and political unrest overseas, particularly in developing nations.
Yesterday, Treasury Secretary Janet Yellen said that central banks in wealthier nations should be cognizant of the impact raising rates in their country will have on developing nations. Meanwhile, Kristalina Georgieva, the managing director of the I.M.F., and the World Bank have warned that central bank decisions to increase interest rates could cause financial crises in developing economies.
Watch out for net importers of gasoline and other commodities. Speaking on this week’s episode of The Ezra Klein Show, the economic historian, and head of the European Institute at Columbia University, Adam Tooze, said that the strengthening of the dollar — a side effect of the Fed’s interest rate raises — will put pressure on countries that import most of their commodities, which are almost always priced in dollars. “The entire South Asian continent, which is heavily dependent on imported energy, has been facing a double, or triple whammy, where interest rates are concerned,” Tooze told Klein.
And that could lead to a 2008-type meltdown. Most economists believe that banks have much more capital than they did in the run up to the financial crisis. But Tooze says that may not be enough to avoid a global fallout. He points out that nearly every financial contract written over the past decade was predicated on inflation and interest rates staying low. Add up the risks, he said, and there may be cause for concern.
“What if I had 10 percent of Karlie Kloss underwear line without you knowing. And you only had 5 percent.”
— Kanye West on Instagram, attacking the investor Josh Kushner. Let us explain: Kushner is married to the supermodel Karlie Kloss, and West has apparently only recently discovered that Kushner’s Thrive Capital owns a stake in Skims, the shapewear company founded by his ex-wife, Kim Kardashian.
Weekend read: ‘When Women Lead’
As a kid, the journalist Julia Boorstin imagined gender barriers were a thing of the past, and found her mom’s enthusiasm for the feminist movement embarrassing. But as a young reporter at Fortune in 2000, she began to reflect on why men held the vast majority of editorial power. As CNBC’s senior media and tech reporter, she has met hundreds of female executives and has become an expert on the subtle ways gender bias pervades the professional world. She spoke to DealBook about that and her upcoming book, “When Women Lead.”
The interview has been edited and condensed for clarity.
Did you have concerns about writing this?
Yes. I didn’t want to “other” women or female leaders in any way. But we’re facing challenges and need to know the headwinds. Men need to know, and women need to know. There are double standards. We assume progress has been made but if you look at the numbers, they’re crazy. Only 8 percent of Fortune 500 companies are led by women.
Why is the tech industry a particular problem?
The barriers are highest for women there, but it’s also an incredibly powerful industry with companies that have changed the outcome of history — Google, Apple, Amazon, Uber. If women don’t participate, that has big ripple effects, and I don’t think people realize just how bad it is. Women-founded companies only get about 2 percent of venture capital funding, and the investments tend to be much smaller than in businesses founded by men.
Is there good news?
The cold, hard data show massive gaps. The copy editor of my book thought the numbers were typos. They’re not, sadly. But I’m optimistic because we do now have building blocks in place for meaningful change.
There are amazing women creating game-changing companies, and the pandemic has shone a spotlight on key characteristics and strategies that female leaders are more likely to deploy, maybe because they’ve had to do more with fewer resources. Women tend to be more comfortable with a communal approach over a top-down style, are adaptable, scrappy, and more likely to start purpose-driven companies.
It’s important to elevate the successes, and make the label “female C.E.O.” work for women, not against them.
THE SPEED READ
Deals
Credit Suisse will buy back $3 billion worth of bonds, boosting its stock price; the Swiss bank is also reportedly seeking an investor to back a spinoff of its corporate advisory business. (WSJ, Bloomberg)
Tiger Global is said to be raising just $6 billion for its next private equity fund, less than half the size of its last fund. (FT)
A new E.T.F. may let you bet against Jim Cramer’s stock picks. (Insider)
Policy
A new C.F.T.C. crypto case shows how to sue an “amorphous digital blob.” (Politico)
House Speaker Nancy Pelosi is pushing the F.C.C. to closely examine Standard General’s $5.4 billion takeover of the broadcaster Tegna. (Bloomberg)
A federal judge ruled that key provisions of New York’s new gun law were unconstitutional. (NYT)
Best of the rest
The crypto exchange Binance said an estimated $100 million was stolen after one of its blockchains was hacked; the company said the hack has since been contained. (WSJ)
TikTok’s parent company, ByteDance, reportedly expects to lose over $7 billion this year, more than triple what it lost in 2021. (WSJ)
London’s most expensive mansion may be owned by the founder of the embattled Chinese real estate developer Evergrande. (FT)
“So You Want to Work Remotely: A Guide” (NYT)
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