One of the curious clauses of Elon Musk's $44 billion takeover agreement for Twitter is that the billionaire isn't allowed to post disparaging tweets about either the company or any of its representatives during the deal finalization phase. The Twitter board this week approved Elon Musk's offer to take over the world's largest micro-blogging platform after initially resisting the attempted takeover by adopting a so-called 'poison pill' strategy. Despite the initial reluctance, the board members eventually approved the offer after Musk outlined a definitive plan to raise the mammoth sum of money.
Twitter's deal with Elon Musk came after a ton of drama over the past week that started with Musk buying a 9.2 percent stake in the company earlier this month. Following that deal, Musk offered to buy Twitter outright, offering $54.20 per share for the micro-blogging platform. Despite the generous offer, the world's richest man knew that Twitter's board of directors might not welcome his buyout proposal and admitted as much in an interview last week. However, despite the teething troubles, the offer has since been accepted, and the deal is now finally in the process of being closed.
A new SEC filing released on Wednesday revealed that Elon Musk would be required to refrain from posting tweets that "disparage the company or any of its representatives" until the deal is finalized. Failure to honor the agreement will require him to pay Twitter a sum of $1 billion. Musk will still be able to tweet about the deal itself, but only as long as he doesn't revert to his usual antics and goes on a foul-mouthed tirade against Twitter or its employees. Musk is known for using Twitter as his personal loudspeaker and was even fined in 2018 for alleged misleading tweets that violated SEC regulations.
$1 Billion Fee For Pulling Out Of The Deal
Another notable detail in the agreement is a $1 billion breakup fee that will be applied to either party if they choose to pull out of the deal during the finalization process. It means Musk will have to pay Twitter a billion dollars if he suddenly decides not to go ahead with the purchase, and conversely, Twitter will have to pay him the same sum of money if it pulls out of the deal.
It will be interesting to see if Musk will be able to abide by the 'no disparaging remarks' clause, but given his propensity to shoot from the hip, it certainly will not be an easy task. For example, even after agreeing to the clause, Musk shot off a tweet that could be seen as disparaging toward Twitter's top lawyer Vijaya Gadde. However, it's not immediately clear if that will count as a violation of the $1 billion clause, mainly because Elon Musk was careful enough not to name Gadde in his tweet.
Source: SEC