Before buying Twitter … and 5 reasons that may lead to the collapse of the deal
Disclosures to the US Securities and Exchange Commission showed that Tesla CEO Elon Musk has sold $8.5 billion of shares in the electric car maker, in an operation likely to help fund his planned purchase of Twitter.
Musk said, in a tweet, Thursday, that “there are no further plans to sell shares in Tesla anymore.” He sold about 9.6 million shares this week, according to records on Thursday and Friday, equivalent to 5.6 percent of his stake in the company.
It was not clear if all of Musk’s recent sales of Tesla stock had been reported, and the company did not immediately respond to a Archyde.com request for comment.
The sale took place after Musk reached, on Monday, a deal to buy Twitter for $44 billion in cash, in a deal that will transfer control of the social media platform, which is used by millions as well as world leaders, to be in the hands of the richest person in the world, and the net worth of Musk is $ 268 billion. , according to Forbes magazine.
As part of the deal, Musk pledged to pay off $21 billion in debt in the form of stock, and it is not yet clear how the billionaire will collect the remaining $12.5 billion.
Tesla’s stock has fallen about 20 percent since Musk revealed he had bought a more than 9 percent stake in Twitter on April 4.
An informed source told Archyde.com that Musk is looking for partners to reduce his contribution to the deal, adding that it is not certain that such a partner will emerge.
This is the first time Musk has sold Tesla shares since he sold $16.4 billion worth of stock in November and December, after polling Twitter users about selling 10 percent of his stake in the electric car maker.
It seems that the sale of the famous social network, Twitter, to the American business giant, Elon Musk, will be threatened with failure and collapse, as there are a number of factors that threaten to accelerate its cancellation, collapse and failure.
American media reviewed a number of reasons and factors that might lead to the cancellation of the $44 billion deal, as the Washington Post said in a report seen by Al Arabiya. Net, that there are 5 reasons that may precipitate the collapse of the deal and lead to its failure, even though it is “moving very quickly towards completion.”
Musk had announced that he intends to acquire Twitter for $44 billion, and outlined his plan to finance the deal by taking loans from banks, in addition to financing about $21 billion from his own shares.
The “Washington Post” says that the first five factors that may lead to the collapse of the deal is the “Twitter stock”, whose price fell last Wednesday to close at $48.64, which is much lower than the purchase price ($54.20 per share) that was agreed upon with Musk.
Analysts said that “this indicates that some investors were dismayed by the possibility of a failure of the deal.”
The second factor is the “Tesla stock,” as Musk said that he plans to finance about $21 billion from the deal with his own shares, which means that a large part of that will come from his large stake in the “Tesla” electric car company, but the “Tesla” stock fell in price. The day after the announcement of the acquisition of Twitter, the decline led to a cut of $100 billion from the market value of the shares, which in turn damaged Musk’s fortune, and this could jeopardize the financing of the deal if the stock continues to decline.
According to the Washington Post, the third factor is Musk’s tweets, as the man has more than 88 million followers on Twitter, where he shares everything related to him and his work, and is also known for posting somewhat controversial or influential elements in The market led to him getting into trouble with the Securities and Exchange Commission.
The terms of his deal to acquire Twitter allow him to tweet about his acquisition “as long as these tweets do not detract from the company or any of its representatives,” according to what the Washington Post says.
A source familiar with the dealmaking process, who spoke on condition of anonymity to describe confidential matters, said the clause only applies when Musk tweets or comments on the deal itself, so negative comments about Twitter outside of that don’t violate the terms.
And the “Washington Post” quoted that the “facilitated penalty clause” is one of the factors in the collapse of the deal as well, as “the terms include a termination fee of one billion dollars, which Musk or Twitter will have to pay in the event of withdrawing from the deal for specific reasons.”
Analysts say the fees, which are no stranger to a deal of this size, are not large enough to prevent either side from pulling out.
The fifth and final factor that threatens the Twitter deal is that Musk can change his mind, as the man seems to be eager to buy Twitter and join its board of directors, but he can change his mind at any moment.