According to a new SEC filing, in a scenario where Elon Musk is unable to secure enough debt funding to complete his $44 billion bid to acquire Twitter, he’d be required to pay Twitter a termination fee of $1 billion.
This is likely not to happen because days before his bid got accepted by Twitter, the billionaire said he had acquired enough funding for his offer.
Twitter’s board before warming up to the bid had tried to prevent a hostile takeover of the company. The board adopted a “poison pill” otherwise known as a shareholders’ rights agreement. “The Rights Plan will reduce the likelihood that any entity, person, or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders,” Twitter said via a statement.
Elon Musk’s offer most likely got considered after he revealed that he had acquired $46.5 billion to finance the deal.
“The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders,” Bret Taylor, Twitter’s Independent Board Chairman said.
Twitter’s acceptance of Elon Musk’s bid has raised concerns from several parties. For example, various human rights groups have come up to shed light on the possibility of hate speech thriving on Twitter all in the name of “free speech” which is the agenda that Elon Musk is pushing. “The last thing we need is a Twitter that wilfully turns a blind eye to violent and abusive speech against users, particularly those most disproportionately impacted, including women, non-binary persons, and others,” Michael Kleinman, the director of technology and human rights at Amnesty International USA said on Monday. Elon Musk is the “singular solution I trust” to run Twitter, Jack Dorsey said in a Tuesday tweet.
In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.
Twitter will also have to pay Elon Musk $1 billion in breakup fee if the company decides not to go through with the deal as a result of another offer, according to this filing.
Paul Femi Balo is the founder and publisher of TechBooky. He covers artificial intelligence, African technology, digital infrastructure, enterprise technology and the global digital economy.
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