Elon Musk can’t get away from Twitter deals by paying $ 1 billion

Musk’s plans to buy Twitter have plagued policy makers around the world.

Joe Skipper | Reuters

Elon Musk By paying the agreed $ 1 billion split fee, you can’t leave his deal to buy Twitter. It’s not that simple.

Musk tweeted that he decided to do it on Friday Put Twitter acquisition “on hold” As the company has long argued, it’s investigating whether the amount of fake / spam accounts on Twitter is actually only 5%.

He followed the tweet, reiterating that he is still working on an acquisition.

But he is at risk of proceedings from twitter Due to a breach of contract that could cost the wealthiest people in the world billions of dollars.

More than the dissolution fee

Mask and Twitter have agreed on a so-called $ 1 billion reverse termination fee When both sides reached an agreement last month. Still, the split fee is not an optional payment that allows musk to bail without results.

The reverse split fee paid by the buyer to the target applies when there are external reasons such as regulatory agency mediation or concerns about third party financing that the transaction cannot be closed. Buyers can also walk in the event of fraud, assuming that the discovery of fraudulent information has a so-called “serious adverse effect”.Market decline like current sold out Twitter loses more than $ 9 billion in market capitalizationAccording to senior M & A lawyers familiar with this issue, musk is not considered a valid reason for dissolution (no dissolution fee or dissolution fee).

Masks and investors may want better deals

The reasons for masks to put a deal on hold may be similar: he may want Twitter to lower its selling price. Twitter’s share price fell more than 8% on Friday, down about 23% from Musk’s agreed purchase price of $ 54.20 per share. Part of this decline is related to the overall downturn in tech stocks this month. Nasdaq has fallen another 11% since the market closed on April 25th. The day Twitter accepted the mask offer..

“This is probably a bargaining tactic on behalf of Elon,” Bernstein’s senior research analyst Toni Sakonagi said on Friday. CNBC’s “Squawk Box”.. “The market has fallen sharply. He’s probably using negotiating tactics in the guise of a true active user,” he said.

Mask may feel pressure or obligation to lower prices on other potential investors on Twitter, even if the wealthiest people in the world are less price-sensitive.

mask Under negotiation with external investors For both equity and preferential lending to reduce his personal investment in Twitter.If he can lower the prices of social media companies, the returns of external investors could be higher When Twitter is published Ownership or resale.

Why he could still try bail

He said he’s still committed to buying Twitter, but Mask may want to throw a towel given his paper losses. Tesla Share ownership. Tesla’s share is down about 24% from last month.

If Tesla’s loss is related to Twitter’s acquisition and Musk believes it could outweigh both the $ 1 billion cancellation fee and the additional damages claimed in court if he loses, he You can judge that it makes sense to leave.

But he also has to deal with the loss of reputation that accompanies the closing of a deal. It is unclear if future companies are at risk of selling to masks with that track record.

Mask couldn’t comment immediately.

Twitter may need to renegotiate

As Tiffany and LVMH finally settled, Twitter may not have many good options other than renegotiating with musk. The company probably wants to avoid expensive and protracted proceedings. Employees may flee because the company has no clear plans for the future. Twitter is already cutting costs.. On Thursday it said it had dismissed two executives and put them on hold.

When Twitter agreed to sell itself to Mask for $ 54.20, the board didn’t bother to demand a higher price. Partly because there were no other buyers interested At that price. Twitter’s board has concluded that it is unlikely that it will soon return to high levels of trading, given the decline in valuations of peer stocks this year. Facebook When snap..

The best result of Twitter may be to accept lower offers from Mask.

A Twitter spokesperson couldn’t comment immediately.

See: Elon Musk says he’s “still committed” to the acquisition of Twitter

Elon Musk can’t get away from Twitter deals by paying $ 1 billion

Source link Elon Musk can’t get away from Twitter deals by paying $ 1 billion

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