Nobody forced him to decide to buy it. After signing the contracts he should have to follow through.
Oh, yeah I do know. Because the $55B is other people's money, and the $1B would be his money. So his choices at this point are 1) get out of the deal for approximately $0, 2) get out of the deal for approximately $1B, 3) buy Twitter for approximately $0.
Pretty clear why #2 isn't being considered.
People keep repeating this wildly untrue thing as if it is fact. The merger contract is a public document. Show us where it says he can just pay $1B and walk away if he changes his mind.
>Upon termination of the Merger Agreement under other specified limited circumstances, Parent will be required to pay Twitter a termination fee of $1.0 billion. ...
(1) the conditions to Parent’s and Acquisition Sub’s obligations to consummate the Merger are satisfied and the Parent fails to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement; or (2) Parent or Acquisition Sub’s breaches of its representations, warranties or covenants in a manner that would cause the related closing conditions to not be satisfied. Mr. Musk has provided Twitter with a limited guarantee in favor of Twitter (the “Limited Guarantee”). The Limited Guarantee guarantees, among other things, the payment of the termination fee payable by Parent to Twitter, subject to the conditions set forth in the Limited Guarantee.
I am not contract law knowledgeable, but how is 1 not a get out of it for a billion clause that you say is untrue.
"Specifically, this termination fee is payable by Parent to Twitter if the Merger Agreement is terminated by Twitter because (1) the conditions to Parent’s and Acquisition Sub’s obligations to consummate the Merger are satisfied and the Parent fails to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement;"
The "terminated by Twitter" is important. Musk does not have the right to terminate. Twitter has not terminated the acquisition.
He can’t just say “I’m out, here’s a billion dollars for your trouble.” Twitter can (and did) sue for specific performance (forcing Musk to close the sale). If the court decides to award monetary damages instead of specific performance that’s capped to $1B but it’s not a simple break up fee.
Also most of the purchase will be Musks money too. Financially he’s much better off paying $1B than buying Twitter at the contract price today.
"Specifically, this termination fee is payable by Parent to Twitter if the Merger Agreement is terminated by Twitter because (1) the conditions to Parent’s and Acquisition Sub’s obligations to consummate the Merger are satisfied and the Parent fails to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement;"
The comment conviently cut the first part of the sentence where the clause is effective if the acquisition is terminated by Twitter.
The legal commentary I've seen on this deal states that monetary damages are capped at $1B (and actual damages would obviously be much higher) so the two outcomes are basically 'Musk forced to buy Twitter' and 'Musk pays Twitter $1B' without much in between. Assuming the lawyers who took the time to read the contract know what they're talking about it would be a pretty big surprise for the Delaware Chancery to throw out the contract and award higher monetary damages.
The $55B isn't all other people's money. He sold a ton of Tesla stock to put up his share (about half, IIRC). That alone would draw SEC ire, manipulating the Tesla stock price under apparently false pretenses.
I suspect that this is the reason his lawyers finally got through to him: go through with the deal or be in very big trouble. He will spend a lot of his own money on it, but he does at least get a major social media corporation for that money.
Whether it's worth it, either in future earnings or in the power he gets from it... I have no idea. Probably not, seeing how poorly considered the whole thing has been so far. But then I don't see the appeal of Twitter at all, so I can't predict what will happen to it in the future.
No breakup fee was specified for 'the deal failed because he got cold feet'. That's one of the reasons the deal was so bizarre. He wrote it, and he wrote it in a matter that did not give him much room to maneuver.
Note that Musk's immediate loss, if the deal goes thru at $44B, is going to be way over $1B (more like $10B perhaps) compared to what the market had been valuing the company at, so I'm pretty sure he'd have jumped at the chance to back out for "only" $1B if that was an option!
https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...
Elon Musk can't invoke that clause. Only US government, or EU, or maybe a bank can invoke that.