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What agreement does Musk and Twitter have with each other?

Elon Musk was asked not to insult Twitter on social networks and must pay a billion dollars if “flip” in the deal.

Compensation of one billion USD if the deal is canceled

According to documents filed with the Securities and Exchange Commission (SEC) on April 26, Twitter will have to pay a termination fee of one billion USD in case of termination agree sell to Elon Musk for $44 billion. Conversely, Musk also has to pay the same amount if he changes his mind.

The document lists a $1 billion compensation fee that will be imposed if Musk doesn’t pay as promised; Twitter accepts another offer to buy; or shareholders voting against Musk’s proposal. Twitter also may not call or negotiate with any other potential buyers after the deal, even if it pays a higher price.

Elon Musk.  Photo: Reuters

Elon Musk. Image: Reuters

The deal is expected to close on October 24. However, the cancellation date will be extended by 6 months if both parties want more time to meet certain legal or regulatory conditions.

In addition, the SEC document also details changes to Twitter’s employee stock bonus program, as the social network will withdraw from listing after the transaction is completed.

Musk must not insult Twitter on Twitter

Under the agreement, Musk must “behave on his own terms” on social media, where his tweets must not “discredit the company or any of its representatives”. However, the US billionaire is still allowed to post information about mergers or contemplated transactions on this social network.

According to some experts, the deal came after Twitter noticed that Musk’s tweets on the platform had a big impact on public opinion. This may also be the reason Musk delete some content posted after news he bought Twitter.

Even so, Musk is not deterred from mocking others on the platform. Last week, this billionaire was post picture compare Bill Gates to a pregnant man.

Don’t be distracted by the business

The agreement between Musk and Twitter also sets out rules so that both are not distracted when buying and selling. External influences, such as public or employee objections, cannot be a reason for either side to withdraw.

This provision is considered to be of practical significance because the deal encountered difficulties objection from Twitter staff. On April 25, US Senator Elizabeth Warren also wrote on Twitter that Musk’s acquisition of the social network was “dangerous to democracy”.

The document also stipulates that Covid-19 or any future pandemic, cyberattacks, changing legal regulations, or other unknown objective factors cannot be used as an excuse. due to either party canceling the agreement. If you do this, a $1 billion compensation will be activated.

Musk is only allowed to merge Twitter

Under the agreement between the two sides, Twitter will merge into another company owned by Elon Musk. That’s different from Musk buying Twitter outright, which is arguably more hostile.

To do this, Musk established three holding companies called X Holdings I, II and III. These businesses were created to either acquire or merge with Twitter, either directly or indirectly, according to SEC filings. All company records refer to the plan as “Project X”.

In addition, the establishment of the above companies also sets the stage for Musk to potentially merge his portfolio with the companies he currently runs including Tesla, SpaceX, Boring Company and Neuralink. All can be under one of the parent companies mentioned above.

In 2020, the US billionaire was excited about the idea of ​​bringing the businesses he was running under a parent company named “X”. However, during a TED event in mid-April, he acknowledged the process would be difficult and very difficult to do.

Bao Lam

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