Elon Musk has appeared to waste no time before violating his merger agreement with Twitter.
Is Elon Musk’s spectacular $44-billion acquisition of Twitter about to fall victim to one of the greatest outbreaks of buyer’s remorse of all time?
Closing the deal, which is fashioned as a merger between Twitter and a new company owned entirely by Musk, would take several months. If the deal blows up, either Twitter or Musk would be on the hook for $1 billion in damages . So it’s worthwhile to examine the cost-benefit calculation for Musk if he chooses to walk away.
In this case, the funding does appear to be assured and Musk’s intentions far more advanced. But that doesn’t mean that he can’t back away from the deal at any point before its closing. That makes Musk vulnerable to margin calls from his bank lenders, forcing him to sell shares if the stock continues to fall; Musk as a seller is not a good look for Tesla, since much of its value derives from his identification with the company.
Then there’s the conflict that Twitter might generate for Musk — that is, Tesla — with the government of China. Just as Tesla shareholders have been displaying disquiet about the deal, Twitter shareholders have been displaying skepticism. Twitter stock has not converged decisively toward the $54.20 sale price since the announcement, nestled below $50 for much of the week.
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