Despite billionaire Elon Musk’s announcement that he had frozen the $44 billion purchase of Twitter, the company’s board of directors is still awaiting implementation of the purchase.
Musk announced the suspension of the deal until the percentage of fake accounts in Twitter is known, which the company says in its reports is estimated at 5 percent of active users, according to a report published by the newspaper. The Wall Street Journal.
Can Musk or Twitter drop the deal?
The newspaper’s report shows that abandoning any of the parties from the deal will not be an easy process, especially in light of both sides signing a merger agreement, which includes specific details about what each party will do to ensure the completion of the agreed deal.
The agreement also includes the legal rights that each of them enjoys so as not to hinder the completion of the deal.
The report indicated that Musk’s enthusiasm for quickly negotiating the Twitter deal made him commit to some components that allow Twitter to sue him to pursue the deal, in a legal clause known as “specific performance.”
The two sides agreed to pay $1 billion in fees if either of them caused the deal not to go through for certain reasons, known as “termination fees,” which were identified in three specific scenarios.
Musk could drop the deal and pay $1 billion in three specific scenarios: if regulators try to block the deal, if he fails to raise the necessary funding, or if he can prove that Twitter has changed for the worse since the deal was agreed.
The report pointed out that Musk could resort to the fact that the numbers of fake accounts in Twitter when he signed the agreement were not accurate, or that Twitter tried to distort this information in its reports, which may open the door to discussions related to the settlement.
For his part, Twitter’s board of directors feels that the deal with Musk is still valid, and said, “We intend to close the deal and enforce the merger agreement.”
The report indicated that Twitter could resort to the “specific performance” clause to compel Musk to continue implementing the deal or provide fair compensation.
The newspaper pointed out that it is premature to speculate on the course of the deal, as it is still possible to complete the deal, and implement it as soon as next summer, or the two parties may negotiate a settlement if Musk wants to exit the deal or lower the price.
Twitter had recently announced the departure of two of its top executives and the suspension of all non-essential appointments in the midst of Musk’s purchase of the group, according to an earlier report by AFP.
According to the New York Times, Musk claimed in a presentation to investors that he could increase the company’s revenue fivefold by 2028, dramatically increase subscription revenue and raise the number of active users from 217 million at the end of 2021 to 931 million in 2028.