Billionaire Elon Musk may rethink buying Twitter?
Four years ago, billionaire Elon Musk vowed to start a peanut manufacturing company to take over Warren Buffett’s iconic See’s Candies company. Then Mr. Musk changed his mind. It wouldn’t be surprising if Mr. Musk’s $44 billion acquisition of Twitter was done in a similar way.
Surely the Tesla boss was very serious about buying Twitter up until recently. Funding from investment bank Morgan Stanley has been strengthened. The deal includes a $1 billion fee that either Musk or Twitter would have to pay if they signed the contract. And Twitter’s lawyers have even introduced a so-called “specific performance” provision that could theoretically force billionaire Musk to buy the company if he threatens to back out, despite the fact. this can be solved by adding a breakup fee (a penalty established in takeover agreements, which must be paid if the target backs out of the deal).
There are many good reasons for Mr. Musk to hesitate, especially on the matter of Tesla. Shares of electric-car maker Tesla have fallen about 20 percent since Musk first revealed his stake in Twitter, in part because Musk was able to sell shares to fund “adventures.” his new. If Tesla’s stock rebounds, it’s likely that when the deal with Twitter doesn’t work out, the $40 billion recovery in assets will more than make up for the cost of the shortfall.
Billionaire Elon Musk (Image: AP)
China is also a major point. Tesla makes half of its cars there, or a quarter of its revenue. However, Twitter has nothing to do with China. That’s “uncomfortable” for a self-proclaimed “free speech expert” like Mr. Musk.
In fact, Musk’s arbitrariness probably wouldn’t survive a Twitter deal. European Union Commissioner Thierry Breton told the Financial Times this week that the company must monitor content that is illegal, harmful or at risk of being banned. In the US, where regulators are less aggressive, other tech companies could pose a similar threat. For example, Apple will decide which apps appear in its influencer “store”.
One thing that makes it easy for Mr. Musk to “turn away” before these things become an issue – the market somewhat foresaw that. Twitter shares are currently trading 11% below the asking price, a sizable spread for a deal with little antitrust response. Musk’s tweets criticizing some of Twitter’s actions that could potentially affect the acquisition suggest the billionaire may be starting to lose interest. It is possible that Mr. Musk’s attention will be directed elsewhere and this is not the first time.
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