The terms and conditions set out by Musk and the social media platform ensure that they stick to closing the deal.
According to a new SEC filing released Wednesday, each side agrees to pay the other party a $1 billion penalty if they don't honor the agreement.
Ensuring that both parties are not distracted by external developments that could impact the value of the company is one of the details.
There are some weird details that ensure that Musk and his team focus on closing one of the largest leveraged buyouts in history.
If it pulls out of the deal, it will have to pay $1 billion. If Musk walks away, the company will have to pay the same amount.
The agreement requires that negotiations with other potential buyers be stopped. It has to stop looking for other buyers.
If a potential buyer approaches the company, they will have to give Musk four days to come up with a better offer. The deal with Musk has to continue if he does so. The company will have to pay Musk $1 billion if it goes with the better offer.
If Musk doesn't get funding to purchase the company, he'll have to pay the termination fee. The billionaire has lined up about $13 billion in debt financing, $21 billion from his own equity, and another $12.5 billion through a margin loan that is secured in part by his shares, Insider reported.
If Musk needs more time to meet certain legal or regulatory conditions, the deal will be extended for six months.
Musk must behave himself on the social media platform. Musk shall be permitted to issue Tweets about the Merger or the transactions contemplated hereby, but he must not deparage the company or any of its representatives.
Concerns about how Musk's social media posts could sway public opinion about the platform are likely to be the reason for this.
Earlier this month, Musk deleted a series of posts critical of the social networking site.
Musk makes fun of others despite the filing. Last week, the founder of the electric car company made fun of Bill Gates.
—Elon Musk (@elonmusk) April 23, 2022
The agreement put down other rules to make sure that the deal goes through and that the tycoon is not distracted by any backlash or external developments.
The document says that public backlash against Musk can't be a reason for them to pull out of the deal.
Critics have been vocal about Musk's plans for the social media platform. The voices will likely become louder now that he is running the company. Senator Warren said on Monday that the purchase of Twitter was dangerous for our democracy.
The agreement states that the parties can't use any of the factors listed above as excuses to walk away from the deal.
The agreement makes it clear that there will be a merger between the two companies. That is different from Musk buying the entire company, which is perceived to be a more hostile approach.
The merger was already laid out by Musk. Insider reported previously that he created three holding companies. According to SEC filings, the companies were created to acquire or merge with Twitter.
Insider reached out to both Musk and Twitter for clarification on the merger.
All Rights Reserved © 2024
