[room500]

No. The $1B breakup fee is only applicable if the deal falls apart for very specific reasons (trouble getting financing, regulatory concerns, etc).

Musk cannot just wake up one morning, decide to not buy Twitter, and pay the breakup fee. He has already agreed to buy Twitter and cannot back out.

That is why the bot issue is so important. If Musk can prove that Twitter made false claims to the SEC, he is allowed to get out of the deal. But if not, he must buy Twitter

[icedchai]

As I said in a previous thread, if this were true, the stock price would be higher. Options premiums would be much higher. They are not. The market already knows: he is not buying Twitter for 54.20.

[roflyear]

Market is not always rational. Also it could take years and years for the deal to go through. It would require Twitter to sue musk and everyone to come to some kind of settlement. That settlement would likely be less than the price but not much less. Maybe a few percent less.

It is also Musk. People know he's insane so that is an additional hit to the price. They know he'll do anything to get out of the deal. Doesn't mean he will.

[icedchai]

If you really believe the deal will go through as written, buy calls a couple years out. Anything is possible.

[roflyear]

True. I am not sure I really believe that. I think that is why the price is lower. My head knows the deal should go through - but I also know crazier things have happened.

[tmp_anon_22]

I'm pretty sure most people saying Yes or No to this don't have the information or legal background to actually give that answer.

Saying something confidently does not make it so.

[falcolas]

Most folks are basing their opinions off the standard business acquisition contracts, which include limited exit opportunities for the buyer.

Several of these contracts have even gone to court, so their typical clauses are public knowledge (including the verdicts), even if the specifics are not.

EDIT: The actual contract is public (which makes sense, Twitter is public; a deal to buy would also be public). I have posted it in a sibling contract.

[wolverine876]

> Saying something confidently does not make it so.

Then why does (or did) everyone believe Musk? Why do they believe everything else said confidently on the Internet?

[gamblor956]

No, the agreement does not provide that Musk can withdraw from the agreement based on Twitter's (mis)representations to the SEC, as that is something that would have been covered by due diligence...which Musk waived.

And indeed, Musk's own letter to the SEC confirms that his sole reason for seeking the data is that it relates to his ability to acquire financing for the deal.

https://www.sec.gov/Archives/edgar/data/1418091/000110465922...

[cmeacham98]

NAL - what happens if Musk just refuses to do it and never sends the money? Can Twitter get a court order to garnish Musk's bank account and/or assets for $40B?

[falcolas]

I'm NAL either, but most lawyers speaking on this, with knowledge of the clauses thrown into these contracts speculate that he'd be taken to court for breach of contract.

IIRC, previous acquisitions that were attempted to be weaseled out of were forced to go through by the courts, when the acquisitor's finances weren't the issue.

EDIT: Ooh, the contract is public. Guess that makes sense, as it's a public company. Relevant to this, but section 8.1.d is the stanza relevant to this discussion. And the Act I definitions does define the "parent termination fee" at $1B.

https://www.sec.gov/Archives/edgar/data/0001418091/000119312...

Found via:

https://www.youtube.com/watch?v=_HuY9ZqFAsk

[lmm]

Eventually, yes - if they get a judgement against him and he doesn't pay, they can get an order to do that kind of thing. Same way the court system usually works.

[ceejayoz]

They'd sue for the $1B cancellation fee, I'd imagine.

[ahahahahah]

FFS, this exact thread points out that there is no $1B cancellation fee.

[ceejayoz]

Incorrectly.

> The Merger Agreement also provides that Twitter, on one hand, or Parent and Acquisition Sub, on the other hand, may specifically enforce the obligations under the Merger Agreement, except that Twitter may only cause Mr. Musk’s equity financing commitment to be funded in circumstances where the conditions to Parent’s and Acquisition Sub’s obligations to consummate the Merger are satisfied and the debt and margin loan financing is funded or available. As described above, if the conditions to Parent’s and Acquisition Sub’s obligations to complete the Merger are satisfied and 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.

https://www.sec.gov/Archives/edgar/data/1418091/000119312522...

[ahahahahah]

Ugh, yes, nobody is disputing that. The comment I replied to was using the common, but incorrect, understanding of that to be like a fee that musk would have to pay to cancel the deal, which is pointed out as being an incorrect understanding (and which the text that you quoted also points out is an incorrect understanding). Like, of course, if we just change the meaning of words, then things stated in response to those words may be incorrect.

[Clent]

Correct. It is not a cancellation fee. Musk cannot cancel the contract, only a court can make that determination after concluding that Musk is unable to finance the deal.

I am not a lawyer so I am quite curious as to how that plays out.

Assuming he has it, could the courts force him to sell $40B in assets?

[dragonwriter]

> Assuming he has it, could the courts force him to sell $40B in assets?

In principal, courts could either order him to complete the buyout (specific performance) or make those injured by his failure to do so whole (money damages). If they chose the former and he continued to fail to do so, he could be punished for contempt of court, either civil contempt (including, e.g., progressive fines and/or imprisonment until and unless he complied) or criminal contempt (fines or imprisonment of a set amount of period.)

[falcolas]

https://www.sec.gov/Archives/edgar/data/0001418091/000119312...

Do a search for "Parent Termination Fee".

TL;DR: There is indeed a $1B termination fee.

[tsimionescu]

The fee is to be payed by Musk if the deal falls through for a few soecific reasons: either his financing falls through or a few other conditions (for example, USA blocks the deal).

[naveen99]

doesn't seem fair for either party to have to pay a fee if USA blocks the deal.

[papercrane]

Do a search in the same document for "Specific Performance".