If the $ 44 billion deal between Elon Musk and Twitter falls apart, the two sides will have to pay another $ 1 billion, according to filing securities on Tuesday.
The world’s richest man on Monday struck a deal to buy a social media company for $ 54.20 a share. Mr. Musk, who also heads electric car maker Tesla and rocket maker SpaceX, has said he plans to privatize Twitter and wants to improve productivity and promote free speech on the platform.
Twitter told its employees on Monday that the deal would not close for another three to six months. According to Tuesday’s filing, Mr. Musk in certain circumstances if the deal goes awry. If the social media company has signed an agreement with another suitor whose offer is considered the best, it will be included. Mr. Musk, for his part, will have to pay if the credit for his deal falls apart.
Twitter declined to comment. Mr. Musk did not immediately respond to a request for comment.
Mr. Musk’s finances have played a key role in the plot. Initially, he did not appear to have provided any funding for his bid. But last week, he revealed in the filing that he has commitments for loans from various banks. Mr. Musk repaid સ્ટો 12.5 billion in loans in addition to a $ 13 billion bank loan against its stock at Tesla. He has promised another $ 21 billion in cash, though he has not outlined the source of that money.
It is not typical for the buyer to agree to a fee if the loan is separated, the lawyers said. Fee Mr. Musk – about 2.5 percent of the deal – is on the hook for – the equivalent of another acquisition.
“It’s actually a very simple vanilla merger agreement,” said Steven Davidoff Solomon, a professor at the School of Law at the University of California, Berkeley.
The filing also states that if the deal is not closed by October. 24, both parties can go away. Should the transaction still be awaiting regulatory approval at that time, Mr. Musk and Twitter will take another six months to shut it down.
U.S. regulators may investigate Mr. Musk’s purchase of Twitter but not likely to sue for blocking it, as it is not an example of a company buying a competitor, former antitrust officials said.
European officials said on Tuesday that Mr. Musk’s ownership must comply with its new Digital Services Act. The landmark law, which is expected to take effect next year, requires social media companies to more aggressively police their platforms to combat misinformation and ban certain online advertisements.
Mike Isaac Contribution Report.