Published On: Fri, Apr 29th, 2022

Elon Musk’s Twitter understanding includes a $1 billion stop price on both sides

Elon Musk will have to compensate Twitter a $1 billion stop cost if he doesn’t go by with his $44 billion merger of a amicable network, announced on Monday, per a new SEC filing. The filing, that sum a terms of a agreement, indicates Twitter would have to compensate a same cost underneath specific circumstances.

The billionaire tech exec concluded to acquire Twitter and take a association private during $54.20 per share, valuing a association during around $43.4 billion.

The supports for a understanding are being pulled from several sources, including financing from Morgan Stanley and other financial institutions that have committed to providing $13 billion in financing, along with $12.5 billion in domain loans to Musk, opposite his shares in Tesla and other companies. Musk himself is approaching to yield equity financing of approximately $21 billion.

Twitter accepts Elon Musk’s $44B merger offer

If Musk requires an exit from this agreement for any reason, it will come during a not-so-inconsequential price, though not one that’s astonishing for a understanding of this size. In other words, if Musk’s financing falls through, Twitter gets $1 billion if a understanding is off.

Per a agreement (Parent is a corp. combined by Musk that is shopping Twitter):

The Merger Agreement also provides that Twitter, on one hand, or Parent and Acquisition Sub, on a other hand, might privately make a obligations underneath a Merger Agreement, solely that Twitter might usually means Mr. Musk’s equity financing joining to be saved in resources where a conditions to Parent’s and Acquisition Sub’s obligations to unqualified a Merger are confident and a debt and domain loan financing is saved or available. As described above, if a conditions to Parent’s and Acquisition Sub’s obligations to finish a Merger are confident and Parent fails to unqualified a Merger as compulsory pursuant to a Merger Agreement, including since a equity, debt and/or domain loan financing is not funded, Parent will be compulsory to compensate Twitter a stop cost of $1.0 billion.

Earlier reports didn’t have this fact correct. They had suggested Twitter would have to compensate a stop cost of around 2.5% though Musk would not have to compensate a retreat stop fee. They did, however, spike a shutting time support as being around Sep to October.

The filing also records that a understanding could be done if it doesn’t tighten by 5 PM PT on Oct 24, 2022. However, it does lay out a sustenance to extend a stop date for an additional 6 months if indispensable to accommodate name shutting conditions associated to antitrust law, unfamiliar investments laws or other bureaucratic actions that could impact a agreement from shutting during that time frame.

Twitter could still take another offer, if one were to manifest before closing, a filing also records — though that offer would expected need to come prepared to compensate a $1 billion stop cost on a Musk deal. Twitter could also finish a understanding if stockholders opinion opposite it.

The agreement states a resources where Twitter could cancel a understanding as follows:

Upon stop of a Merger Agreement underneath specified singular circumstances, Twitter will be compulsory to compensate Parent a stop cost of $1.0 billion. Specifically, this stop cost is payable by Twitter to Parent since (1) Twitter terminates a Merger Agreement to concede Twitter to enter into a decisive agreement for a competing merger offer that constitutes a Superior Proposal; or (2) Parent terminates a Merger Agreement since a Board recommends that Twitter’s stockholders opinion opposite a adoption of a Merger Agreement or in preference of any competing merger proposal. This stop cost will also be payable by Twitter to Parent in a eventuality that, generally, (1) a competing merger offer for 50% or some-more of a batch or combined resources of Twitter has been publicly announced and not withdrawn, (2) a Merger Agreement is done since Twitter’s stockholders destroy to adopt a Merger Agreement or since Twitter materially breaches a Merger Agreement, and (3) within twelve months of such stop of a Merger Agreement, Twitter enters into a decisive agreement providing for a competing merger offer for 50% or some-more of a batch or combined resources of Twitter and such merger is subsequently consummated.

A finish timeline of a Elon Musk-Twitter saga

More to come…

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