Elon Musk will have to pay Twitter USD 1 billion if he cannot complete the acquisition process as promised. This is revealed from a document of the US Securities and Exchange Commission (SEC).
The richest man in the world has previously agreed to buy Twitter and take it into a private company at a price of USD 54.20 per share, bringing the company's valuation around USD 43.4 billion.
Funding for the acquisition came from several sources, including loans from Morgan Stanley and other financial institutions that have committed to contribute USD 25.5 billion. Musk himself is expected to provide funding of USD 21 billion.
If Musk decides to cancel the deal for some reason, for example if Musk is unable to provide funding to complete the transaction, he will have to pay a cancellation fee of USD 1 billion .
The document also states that the deal will be canceled if it is not completed before October 24, 2022 at 5:00 pm U.S. Pacific time, as quoted from TechCrunch, Friday (29/4/2022).
But the deadline could be extended to six months to resolve issues related to anti-competition law, foreign investment law, or other government action.
Before the acquisition agreement is finalized, Twitter may also accept offers from other parties. Twitter can also cancel the deal if opposed by shareholders. If either of these two scenarios occurs, Twitter will also have to pay a cancellation fee of USD 1 billion.
Interestingly, the document also says that Musk may tease about the deal with Twitter, as long as his teasing does not disparage the company or its representatives.
Musk who is vocal on Twitter seems to be potentially violating this rule. The reason is that the CEO of SpaceX and Tesla uploaded several jokes criticizing Twitter executive Vijaya Gadde which caused Gadde to receive racist and harassing comments from his followers.