Elon Musk’s announcement yesterday that it was halting preparations for its Twitter acquisition seriously alarmed investors, and now the company’s capitalization is $9 billion below what he originally called it. Experts argue that if the deal is rejected, Musk cannot limit himself to paying a $1 billion fine. To this amount will be added damage, which will be determined by the court at the request of the injured party.
According to the explanations of lawyers given by the resource CNBC, is the previously agreed contractual penalty of 1 billion. Such a reason can be, for example, complaints from supervisory authorities or problems with the financing of the transaction. One of the parties could refuse to issue if significant falsification of the data provided by the second party at the negotiation stage is found.
A significant drop in the value of Twitter’s assets, experts say, doesn’t provide the basis that will allow Musk to give up his buying intentions and walk away with just $1 billion, but many analysts agree he can take advantage of the pause that arose in order to agree on a price reduction. While he’s not particularly concerned about the price of Twitter’s assets himself, he could face pressure from partners in the deal.
In fact, Elon Musk himself said he’s still willing to buy Twitter. For this reason, termination of the deal on his initiative is possible only in the event of a significant change in the conditions. For example, if the potential damage from a fall in Tesla stock, which Tesla still uses to some extent to fund its purchase of Twitter, outweighs the potential cost of breaking the deal, then Musk may abandon his original intentions. True, this will cause significant damage to the billionaire’s reputation, and any attempts to buy other companies in the future will be viewed with suspicion by counterparties.
By the way, Twitter CEO Parag Agrawal on Friday explainedthat he still hopes to close the deal with Elon Musk but is preparing for all scenarios and making every effort for the good of the company. His job, he admitted, is to build a stronger Twitter every day.