Musk said he plans to fund the deal with his own equity of about US$21 billion. Part of that will come from his significant stake in electric car company Tesla, where he serves as the CEO, as collateral for the deal.
But Tesla’s stock price fell a day after Musk’s Twitter acquisition deal was announced. The decline drove US100 billion dollars from the stock, spurring Musk’s fortunes. And it could jeopardize the financing for the deal if it goes too low.
Investors are concerned about how much risk Musk is willing to take because he may sacrifice Tesla stock — which has done very well for relatively underperforming Twitter.
Tesla’s stock was trading down more than 12 percent on Thursday from Monday’s closing price.
Musk, who has nearly 88 million followers on Twitter, is a prolific poster on the site, sharing everything from updates on his rocket company to popular memes.
He has also been known to post some controversial or market-moving items, which has landed him in trouble with the Securities and Exchange Commission.
The terms of their deal to acquire Twitter allow them to tweet about their acquisition “as long as such tweets do not offend the company or any of its representatives.”
A person familiar with the dealmaking process, who spoke on condition of anonymity to describe the confidential matters, said the clause only applies when Musk is tweeting or commenting about the deal, and So outside of this negative comments about Twitter don’t infringe. terms.
Expressing support for encrypting private messages and saying, “Let’s make Twitter the most fun!”
He’s even joked, tweeting, “Next I’m going to buy Coca-Cola to bring back the cocaine.”
But some of his tweets are related to Twitter employees and researchers studying harassment on social media.
Musk drew conservative criticism of the two executives on Twitter, and Twitter users quickly piled on — calling on Musk to fire an executive or use racist language to describe him. Musk’s tweets have the singular power of turning a crowd against people with very low profiles.
Musk’s tweets do not appear to have violated the terms of the deal so far, although they have generated some concern from workers and others.
relatively low partition fee
The terms of the deal include a $US1 billion termination fee, which Musk or Twitter must pay each other if they exit the deal for specific reasons.
Analysts say the fee, which is not unusual for a deal of this size, is not large enough to deter either side from walking away.
As part of the terms of the deal, Twitter can’t seek other buyers, but it may entertain offers to come. If the company gets a better offer, it will have to pay the split fee.
Musk may be asked to pay a fee in specific circumstances in which his funding does not come.
Musk may change his mind
Musk seems inspired to buy Twitter — he took a major stake in the company, considered joining its board, worked out a backup plan, failed his first bid, and outlined funding for the deal.
He has been successful on several fronts – putting electric cars on the road, sending rockets into space, and helping Ukraine’s government acquire a Starlink satellite communications terminal during the war.
But billionaires haven’t always followed through on their grand plans—or they’ve had mixed results.
Most famously, he tweeted that he had the funds secure to take Tesla private at $US420 a share. The SEC later fined him US$20 million — and Tesla is still listed on the Nasdaq.
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