Elon Musk to pay Twitter $1 billion as deal termination fee, Twitter needs to do the same

Musk agrees to pay Twitter a $1bn 'termination' fee if he pulls the plug on the $44bn take-over deal, the tech giant agrees on the same if they opt for a better offer

Musk agrees to pay Twitter a $1bn 'termination' fee if he pulls the plug on the $44bn take-over deal, the tech giant agrees on the same if they opt for a better offer
Musk agrees to pay Twitter a $1bn 'termination' fee if he pulls the plug on the $44bn take-over deal, the tech giant agrees on the same if they opt for a better offer

Twitter-Musk’s $44 billion deal includes a $1 billion termination fee

Tesla CEO Elon Musk will have to pay Twitter a $1 billion termination fee if he doesn’t go through with his $44 billion acquisition of the social network, announced on Monday, as per a new US Securities and Exchange Commission (SEC) filing. The filing, which details the terms of the agreement, indicates Twitter would have to pay the same fee under specific circumstances.

Other circumstances where Twitter will have to pay the fee includes if Musk terminates the Merger Agreement because the tech giant’s Board recommends that the company’s shareholders vote against the deal or in favour of a competing acquisition proposal.

The billionaire tech exec agreed to acquire Twitter and take the company private at $54.20 per share, valuing the company at around $43.4 billion.

The SEC filing said, “Upon termination of the Merger Agreement under specified limited circumstances, Twitter will be required to pay Parent a termination fee of $1 billion, Musk will be required to pay Twitter a termination fee of $1 billion if he cancels the deal.”

The funds for the deal are being pulled from several sources, including financing from Morgan Stanley and other financial institutions which have committed to providing $13 billion in the financing, along with $12.5 billion in margin loans to Musk, against his shares in Tesla and other companies. Musk himself is expected to provide equity financing of approximately $21 billion.

If Musk’s financing falls through, Twitter will get $1 billion.

Tuesday’s filing said Musk and Twitter are allowed to walk away if the deal is not completed by October 24 this year. If the deal was still waiting for regulatory approval by that time, the two parties would have another six months to complete it.

Musk on Monday sealed a deal to buy Twitter for $44 billion just three weeks after starting the process and later said he hopes to turn the platform into a haven of free speech where even his worst critics can have their say.

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