Twitter’s board won’t walk away from Elon Musk buyout deal and threatens to enforce it. The billionaire has pledged to buy the company for $54.20 per share. This corresponds to a total cost of approximately 46.5 billion US dollars. But after signing the contract, Musk probably got cold feet.
Although he specifically waived the usual extensive due diligence, Musk is asking for evidence of fake profiles and spam statistics after the fact. Musk’s obvious goal is to drive down Twitter’s purchase price — or divest completely. This made some Twitter shareholders doubt the takeover would happen, which is why they recently sold their shares for less.
The company’s board of directors is committed to the interests of current shareholders, who of course want to obtain the highest possible price for their shares. “We are committed to completing the transaction at the agreed price and terms as quickly as possible,” the board said Monday. The board strongly recommends that Twitter shareholders accept Musk’s offer of $54.20. If not enough blocks of shares are offered to Musk, the buyout would fail.
Twitter threatens with Kadi
Otherwise, Twitter holds Musk responsible. In large acquisitions, it is common to agree a cancellation clause with high costs, which also happened here: if one party cancels the purchase (sale), it must pay the other a billion dollars. In this specific case, additional rights have been agreed, as shown in a notification to the US capital market authority SEC (Security Exchange Commission) on Tuesday: Both parties can enforce the obligations of the contract against the other part.
Additionally, Musk has given Twitter the right to force him to fund the acquisition as well, provided the money is available. Musk has already struck deals with major banks, guaranteeing much of his Tesla stock. This, in turn, sent Tesla shares plummeting. Compared to mid-April, they are worth a quarter less.
Musk’s tweets, which cast doubt on his loyalty to the pact, are destabilizing investors. But Twitter’s board is undeterred: “The board and Mr. Musk have agreed to a transaction at a price of $54.20 per share. We believe this deal is in the best interests of all shareholders,” a US-Media spokesperson said with, “We intend to complete the transaction and enforce the acquisition agreement.”