Musk's Twitter Offer Remains in Question as Equity Partners Seek to Exit Deal
Just when you thought the Elon Musk Twitter takeover deal was done and dusted off, another potential loophole has been discovered that still lurks in the mix.
according to a new insider reportmany of Musk’s equity partners, who agreed to back Musk’s original $44 billion bid for the company, are now looking to get out of the deal, rather than pay their share of the deal price.
According to investor Andrea Walne of Manhattan Venture Partners:
“Everybody is trying to get out of this, nobody thinks the company should be valued at $44 billion.”
And you’re probably right. Given Musk’s repetition company public garbagefollowed by his own efforts to get out of the deal (which You could still see Twitter take Musk to court), Musk is now looking at overpaying for a company whose value he himself has essentially collapsed.
Twitter’s current market capitalization is $38.52 billion, but some analysts have it much lower than that, even in the $10-$12 billion range.
While seeking to get out of the Twitter deal, Musk made or expanded on major claims about the platform’s bot issues, staff and board issues, security flaws, and much more.
That could well mean Twitter isn’t worth the $44 billion Musk is scheduled to pay, and without a clear plan for how he’s going to rebuild the app’s reputation and get a lot more people tweeting, you can imagine a lot of his partners capital are reviewing their calculations and questioning whether there is any way they can get out of the process.
Which, in reality, there may not be.
According to initiates:
“Musk’s equity co-investors are required to provide the funds in the amounts promised, subject to essentially the same conditions under which Musk himself is required to finance the Twitter acquisition. However, the letters of commitment signed by the co-investors allow Musk, at his discretion, to reduce the investor’s obligation.”
So Musk can set them free, even completely if he wants to. But would he do that?
The bottom line is that there is a scenario where Musk is forced to let his investors out of the deal, leaving him short on funding for his takeover bid.
Which could still keep Musk from paying. Elon would still have to pay the much discussed $1 billion break feewhich would be a solid consolation prize for the Twitter folks left to pick up the pieces.
But there is still a chance that Elon Musk could opt out of his $44 billion Twitter offer, if he wants to go that route.
In response to the Insider report, Musk’s attorney, Alex Spiro, said the vast majority of Musk’s equity investors have been spoken to and are “all in.”
So it may just be another little hiccup. Or maybe, we’re not done with the drama yet.