Musk Must Pay 1.3 Trillion Won Penalty if He Fails to Acquire Twitter

by Jeong Hyunjin

Published 27 Apr.2022 07:02(KST)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Elon Musk, CEO of Tesla and SpaceX, who agreed to acquire Twitter, may have to pay a penalty of $1 billion (approximately 1.25 trillion KRW) if he fails to secure funding and cannot complete the acquisition, CNBC reported on the 26th (local time).

According to the report, Twitter disclosed this information to the U.S. Securities and Exchange Commission (SEC) on the same day when announcing the acquisition agreement with Musk. The disclosure also included a clause stating that if Twitter receives competing bids or if shareholders oppose the agreement, Twitter must pay Musk a $1 billion penalty.

Musk and Twitter agreed the previous day to sell Twitter at $54.20 per share, totaling $44 billion. This proposal, unanimously approved by Twitter’s board of directors, is expected to be finalized within this year after shareholder voting and regulatory approval.

Musk reported that he has secured $46.5 billion in acquisition funds to take Twitter, a publicly traded company, private. According to the filing submitted to the SEC on the 21st, of the total $46.5 billion, $25.5 billion is debt financing from bank loans, of which $12.5 billion is borrowed using Tesla shares as collateral.

In this deal, Twitter’s financial advisors were Goldman Sachs, JP Morgan, and Allen & Company, while Musk’s financial advisory team was led by Morgan Stanley, with Bank of America Securities and Barclays also participating as advisors.