Yeah, but that’s not how public company acquisitions work. Basically the reason that there’s a lag between when the contract is signed and when the acquisition closes is because there’s a lot of logistical stuff that has to happen in the meantime. SEC filings have to be made, shareholders have to approve the transaction, usually at least some regulators have to sign off, etc.
It can be very disruptive to a company’s operations and stakeholders (employees, vendors, customers, etc.) for it to agree to sell itself. So it wants to have its deal, including price, locked down to the maximum extent possible. So if markets turn down in that interim period, 99.9999% of the time, it’s the buyer’s problem. And in any event, Twitter would have had to go back to the shareholders for another vote even if they had wanted to take a lower price.*
But there was no particular reason for them to, because they had a tight contract and there weren’t any compelling arguments that the buyer wasn’t required to close per its terms.
* An obvious question is, what if markets had gone up instead of down in that period? There was still a binding deal to acquire Twitter, but in this instance, it is at least theoretically possible that another buyer could have made an unsolicited offer for the company and the board would have had a fiduciary duty to the shareholders to accept that off. In that case, they can terminate the merger agreement, but then the buyer gets a termination fee and usually reimbursement of transaction expenses. But the reason for the asymmetry is that, barring a deeply distressed situation, a company doesn’t put itself up for sale without a high degree of certainty that a sale on the original or better terms will go through at the end of the day.
It can be very disruptive to a company’s operations and stakeholders (employees, vendors, customers, etc.) for it to agree to sell itself. So it wants to have its deal, including price, locked down to the maximum extent possible. So if markets turn down in that interim period, 99.9999% of the time, it’s the buyer’s problem. And in any event, Twitter would have had to go back to the shareholders for another vote even if they had wanted to take a lower price.*
But there was no particular reason for them to, because they had a tight contract and there weren’t any compelling arguments that the buyer wasn’t required to close per its terms.
* An obvious question is, what if markets had gone up instead of down in that period? There was still a binding deal to acquire Twitter, but in this instance, it is at least theoretically possible that another buyer could have made an unsolicited offer for the company and the board would have had a fiduciary duty to the shareholders to accept that off. In that case, they can terminate the merger agreement, but then the buyer gets a termination fee and usually reimbursement of transaction expenses. But the reason for the asymmetry is that, barring a deeply distressed situation, a company doesn’t put itself up for sale without a high degree of certainty that a sale on the original or better terms will go through at the end of the day.