Don’t Expect The US Government To Actually Stop Elon From Buying Twitter

Honestly, the only thing one can say about the whole Elon Musk buying Twitter situation is that you should expect the unexpected to happen. Nothing about this deal has been normal, even though some moves (like Musk coming up with laughably ridiculous pretextual excuses to try to get out of the deal) were telegraphed way in advance. The Delaware Court of Chancery has said that the deal needs to be completed by Friday October 28th or there will be hell to pay (if you're Elon Musk), and in all likelihood that's exactly what's going to happen. I know a lot of people insist he doesn't intend to close the deal, or that he doesn't have the money, or that something else will happen to stop it, and I find all of those claims to be unlikely at best. The most likely scenario is that in a week, Twitter will be owned by Elon Musk.

Of course, last night a new wrinkle entered the chat, when Bloomberg reported that the US government was considering a security review for Musk's companies, including reviewing his Twitter buyout. The details here are a bit sketchy:

Officials in the US government and intelligence community are weighing what tools, if any, are available that would allow the federal government to review Musk's ventures.

One possibility is through the law governing the Committee on Foreign Investment in the United States to review Musk's deals and operations for national security risks, they said.

The interagency panel, known as CFIUS and overseen by the Treasury Department, reviews acquisitions of US businesses by foreign buyers. It is not clear if a CFIUS review - which would involve assessments by the Departments of State, Defense, and Homeland Security, among others - would offer the government a legal way to conduct a review, the people said.

So, first off, this seems like wishful thinking on the part of someone, rather than a serious issue. Honestly, it feels little different from Donald Trump's random freakout about TikTok (though he did take that further than seemed likely at the time).

As the Bloomberg piece notes, it's not clear that CFIUS has authority here. Musk is not a foreign buyer. He's been a US citizen for two decades.

The strange part (or, really, perhaps not that strange) is that Musk seems to be leaning into this as a possible exit (even though it's not). When someone tweeted that it would be hysterical if the government stopped Elon from over paying for Twitter," Musk responded with the 100" emoji and the crying laughing" emoji, showing agreement:

But, once again, that's not how any of this works. As the excellent Chancery Daily notes, the merger agreement takes this possibility into account, and basically puts all of the liability on Musk to get himself out of" these problems or face massive damages from the court. This is not a case where the US government can say you can't buy Twitter" and Musk gets to walk away.

Specifically, if I'm reading the merger agreement properly, it says that if there are any regulatory holdups to the deal, it's on Elon and his companies to sort that shit out:

The Equity Investor, Parent and Acquisition Sub agree to take promptly any and all steps necessary to avoid or eliminate each and every impediment and obtain all Consents, actions, non-actions, approvals or waivers (or, as applicable, expiration or termination of the waiting periods with respect thereto) under any Antitrust Laws, Foreign Investment Laws (or, as applicable, expiration or termination of the waiting periods with respect thereto) or other Law that may be required by any foreign or U.S. federal, state or local Governmental Authority, in each case, with competent jurisdiction, so as to enable the parties to consummate the transactions contemplated by this Agreement, including the Merger, as promptly as practicable, but prior to the Termination Date...

So... if Musk is actually not trying to get past any of these regulatory hurdles (should they show up) then this is going back to court and the might (I know, I know) become evidence that he's violating that portion of the agreement.

And that's not even getting into a bunch of Musk's other activities, mainly with his recent pushing of Russian propaganda and even cozying up to Russian officials, which some conspiracy theorists are arguing is an attempt to pressure the US to go this route and block the deal. He's been pushing pro-Russian propaganda for a few weeks now, and then initially tried to demand payment from the US government to keep Starlink running in Ukraine, before doing a reverse on that after it started reflecting negatively on him. But this exchange with former Russian Prime Minister (and Putin stand-in) Dmitry Medvedev is just... kinda weird?

Anyway, if Musk's plan is to make himself a threat to US national security to get out of the Twitter deal, it's not going to work. Because that's not how this works, and if he actually was doing that (and I don't think he is) it would end extremely badly for Musk, with him having to pay massive damages to Twitter and facing a bunch of other problems for being a national security threat. Musk has shown himself to be impulsive and not particularly bright, but even this seems beyond him.

So, yeah: this is almost certainly all a distraction combined with some wishful thinking. Chances are that Musk will own Twitter within a week, whether or not he is a security threat.