Twitter Inc (NYSE: TWTR) submitted to a $44 billion takeover proposal from Elon Musk on Monday. If the deal still falls apart, however, the billionaire could be hit with a rather hefty termination fee.
SEC filing reveals break-up fee for both parties
If Musk fails to execute the cash deal, he’ll have to pay $1.0 billion in break-up fee to the social media and microblogging company, an SEC filing confirmed late on Tuesday.
If Parent fails to consummate the merger as required pursuant to the merger agreement, including because the equity, debt and/or margin loan financing is not funded, Parent will be required to pay Twitter a termination fee of $1.0 billion.
Twitter is also bound to paying just as much to Musk if it chooses to withdraw from the agreement for reasons including a better offer from another potential buyer. The San Francisco-headquartered company is scheduled to report its quarterly results on Thursday.
Is Musk-Twitter deal in shareholders’ best interest?
According to Elevation Partners’ Roger McNamee, the $54.20 a share proposal from Elon Musk is not in shareholders’ best interest. Speaking with CNBC’s Morgan Brennan on “Squawk on the Street”, he said:
The board has been asleep at Twitter for a while. They had a CEO who had another full-time job and now they’re selling to someone who’s the CEO of four companies. What’s even remarkable is that it’s the largest going private deal in history and we know nothing about his plan.
McNamee also sees the deal a seminal moment for journalists, considering Twitter’s “outsized role” in journalism.
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