For those excited at the prospect of Elon Musk owning Twitter, be careful not to get to far ahead of yourselves.
Although Twitter agreed on Monday to accept Musk’s offer, the deal could still fall through, according to multiple reports.
A Securities and Exchange Commission filing related to the purchase shows Musk is on the hook to pay a $1 billion termination fee should the deal fall through.
There are a number of ways this could happen.
For one, if the deal is not finalized on or before October 24, 2022, the SEC filing stipulates that Twitter “may terminate the Merger Agreement.”
Additionally, it could also fail if Twitter stockholders “fail to adopt the Merger Agreement.”
This could only happen under “limited circumstances,” including if a third party other than Musk decides to offer “a competing acquisition proposal that constitutes a Superior Proposal.”
Also, although Twitter board members appear to have gone on board with the acquisition in recent days, they still have the power to recommend that stockholders “vote against the adoption of the Merger Agreement or in favor of any competing acquisition proposal,” the filing said.
“The board has to act as fiduciary, so if a higher price comes, they need to consider it,” an unnamed former investment banker told The Epoch Times regarding the deal.
Are you happy Elon Musk is essentially the owner of Twitter?
“But if a higher price does come, Musk can always up his offer.”
“Practically speaking though, there are no other potential buyers right now.”
Another mark in Musk’s favor is the fact that Twitter is subject to “no-shop” restrictions, according to The Epoch Times.
In other words, the board is prevented from soliciting any additional offers.
Another threat to Musk’s acquisition of the social media giant is a growing number of European officials who have threatened to take action if Musk’s ownership were to not adhere to the European Union’s new Digital Services Act, which “requires social media companies to police content more aggressively,” according to The New York Times.
However, a recent tweet from the billionaire suggests he would be willing to toe this line.
By “free speech”, I simply mean that which matches the law.
I am against censorship that goes far beyond the law.
If people want less free speech, they will ask government to pass laws to that effect.
Therefore, going beyond the law is contrary to the will of the people.
— Elon Musk (@elonmusk) April 26, 2022
“By ‘free speech’, I simply mean that which matches the law. I am against censorship that goes far beyond the law,” Musk wrote.