What’s the most expensive mistake you’ve ever made? Booked a holiday for the wrong dates? Added an extra zero to the £260 you owed? Well, for Elon Musk, he thought it would just be $1bn to get out of the $44bn Twitter takeover.
But strict merger laws, brought in after the financial crisis, could force him to close the deal and cough up the full amount.
The Tesla billionaire is trying to back out of the deal after demanding the social media company hand over figures on the number of fake accounts – also known as bots.
Also Read: It’s on: Twitter’s board and Elon Musk negotiate into the early hours over £36bn bid to snap up the social media giant
In 2007 and 2008, a host of high-profile firms including Blackstone and Apollo tried to back out of deals, paying only a reverse termination fee – often 2 to 3 per cent of the overall deal. Sellers now have “specific performance” clauses which can force buyers to close the deal unless they can prove there has been a change in circumstances or misrepresentation with a “material adverse effect”.
The pandemic didn’t count – as per a case in Delaware. But Musk could try and claim the number of bots on Twitter changes the value of the deal.
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