In April this year, Tesla’s CEO, Elon Musk, announced his agreement to buy Twitter for $44 billion. After Twitter was under his ownership, he promised to add new features, remove spam or bot accounts, and to be more transparent about its algorithms. Many banks stepped in and offered loans to Musk which summed around $25.5 billion, more than half the total deal price to buy Twitter.
Currently, Musk is leaning toward terminating the deal because Musk blames Twitter for not providing him enough information to make a decision. On the other hand, according to the Washington Post, Twitter is suing him to close the deal because the company believes his reasons for stepping away are excuses to get out of a financial commitment that he no longer wants to honor.
Although Musk is arguably the world’s richest person, he doesn’t have $44 billion to draw from his pockets and buy the company. In total, Musk signed two agreements with banks such as Morgan Stanley and Bank of America to loan a sum of $25.5 billion. Before declaring an end to the deal, Musk had increased the portion he would take from his own wealth to $33.5 billion.
M. Todd Henderson, a professor at the University of Chicago Law School said, “Musk doesn’t want to own Twitter, the banks don’t want to fund it. We’re in this weird ‘Alice in Wonderland’ situation trying to force this guy to buy a company he doesn’t want to buy. Would you want to fund a guy to own a company that he doesn’t want to own?”
“The likely outcome of the situation is that the judge in Delaware Chancery Court, where the trial will take place, will force a compromise, making Musk pay Twitter a hefty fee for putting it through so much trouble, but letting him walk away in the end,” stated Carl Tobias, a law professor at the University of Richmond.
A reason why banks remain supportive to Musk right now may be because they still want to remain “good” in Musk’s point of view. Tobias said, “You want to keep [Musk’s] business if you’re a bank.” Regardless, Musk is still the world’s wealthiest man and will need help financing however the Twitter situation comes out.
Currently, Musk is leaning toward terminating the deal because Musk blames Twitter for not providing him enough information to make a decision. On the other hand, according to the Washington Post, Twitter is suing him to close the deal because the company believes his reasons for stepping away are excuses to get out of a financial commitment that he no longer wants to honor.
Although Musk is arguably the world’s richest person, he doesn’t have $44 billion to draw from his pockets and buy the company. In total, Musk signed two agreements with banks such as Morgan Stanley and Bank of America to loan a sum of $25.5 billion. Before declaring an end to the deal, Musk had increased the portion he would take from his own wealth to $33.5 billion.
M. Todd Henderson, a professor at the University of Chicago Law School said, “Musk doesn’t want to own Twitter, the banks don’t want to fund it. We’re in this weird ‘Alice in Wonderland’ situation trying to force this guy to buy a company he doesn’t want to buy. Would you want to fund a guy to own a company that he doesn’t want to own?”
“The likely outcome of the situation is that the judge in Delaware Chancery Court, where the trial will take place, will force a compromise, making Musk pay Twitter a hefty fee for putting it through so much trouble, but letting him walk away in the end,” stated Carl Tobias, a law professor at the University of Richmond.
A reason why banks remain supportive to Musk right now may be because they still want to remain “good” in Musk’s point of view. Tobias said, “You want to keep [Musk’s] business if you’re a bank.” Regardless, Musk is still the world’s wealthiest man and will need help financing however the Twitter situation comes out.
