(Video Credit: CNBC Television)
CNBC “Squawk on the Street” co-host David Faber generated nervous and incredulous laughter from his colleagues during a segment discussing Tesla CEO Elon Musk bailing on his Twitter offer, claiming he could go to jail over it.
Faber was joined by market analysts Jim Cramer and Carl Quintanilla in a discussion of Musk nixing his $44 billion deal to buy the social media platform. At the heart of the matter is the fact that Musk claims that Twitter has lied about how many real users it has, contending that approximately half of them are bots or spam accounts. Now that he is backing out of the deal, it will go to court where Twitter will presumably have to disclose the real number of users, allowing a fairer offer to surface.
Twitter chairman Bret Taylor has vowed to take legal action to close the buyout transaction Musk initially agreed to. The SpaceX mogul agreed to pay $1 billion if he backed out of the deal but the board at Twitter is now in a panic over the reversal and wants their day in court. They may regret that wish.
The world’s richest man seems unruffled by the whole dustup. He took to Twitter with photos of himself laughing and displayed four illuminating captions: “They said I couldn’t buy Twitter; Then they wouldn’t disclose bot info; Now they want to force me to buy Twitter in court; Now they have to disclose bot info in court.”
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
— Elon Musk (@elonmusk) July 11, 2022
Musk asserts that he has had a team sampling Twitter to determine the number of bots on it. He has not presented in public his evidence of the claim but will certainly do so in court. Those that see the move as just an excuse to nix the deal are potentially playing checkers while the billionaire plays chess.
His initial tweet was followed by a picture of actor Chuck Norris playing chess with only a single pawn on his side of the board, and a complete set of pieces on the other side, with Musk tweeting, “Chuckmate.”
— Elon Musk (@elonmusk) July 11, 2022
Faber took issue with Musk’s claims that Twitter is being misleading about its bots and spam accounts claims. He stated that there has been “no evidence presented thus far in any way to enhance” Musk’s allegations.
“Even if you were to prove that there were a higher number of bots, you still have to prove that it actually is a material adverse effect,” the host charged.
“I don’t think it is,” Cramer stated. “He spent a lot of time, and his team has spent a lot of time with management going over very strong periods of open store, meaning that Musk really felt that they had gotten a really good look at it. So that is going to hold against them. I still think the likelihood that they get some sort of price cut is good. Boy, the board is in trouble if they just get that walk away.”
Farber was adamant that there was “no way” Twitter would allow that to happen. He brought up the infamous Delaware Court of Chancery which he asserts will enforce the terms of Musk’s agreement.
“Most of the people that you speak with — or at least, certainly that I have — believe that will be the case. Then the question is: you are forcing Mr. Musk to buy the company, does he actually agree to do it? There is this argument being said lately that, well, maybe he will not comply with that. Then we would have a situation where they could put him in jail,” Farber remarked which drew laughter from Quintanilla.
Farber insisted “that’s where we could end up.”
Cramer was also far from convinced by Farber’s threat. He tweeted shortly after the segment, “Jail?”
— Jim Cramer (@jimcramer) July 11, 2022
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