Elon Musk Cancels Twitter Deal
By: Sarah Liu
In April, Elon Musk, the world's richest man, strived to eliminate Twitter spam bots with transparency. He agreed to buy Twitter for $44 billion with support from banks. But Twitter's so-called lack of information and business prospects has changed his mind.
Twitter believes Musk’s reasons are excuses and show a lack of commitment, and they decided to sue him. The cancellation also causes complications for the banks involved as his agreement requires him, and the banks to finish what they started according to legal experts.
Elon Musk was loaned $25.5 billion by banks. M. Todd Henderson, a professor at the University of Chicago Law School asks, “would you want to fund a guy to own a company that he doesn’t want to own?” Though the banks are reluctant, they are not pulling out of the deal because of an agreement Musk signed. At the end of the day, they do not want to ruin their reputation as Musk is still the world's wealthiest man.
Twitter only wants in on this deal because its’ shares are trading at a lot less than Musk agreed to pay shareholders to buy the company. If Musk cancels, Twitter will take on the debt to finish paying the old shareholders. Regardless, “the entire episode has done significant damage to the company’s reputation and workplace morale, with Musk’s attacks inflaming existing concerns about its business. It’s likely the company’s stock price will drop even further if Musk walks away completely.”
Elon Musk has changed his mind about buying Twitter, and there really is no way around it for anyone. The trial is expected to “force a compromise,”, making Musk pay a “small fee” to the banks and a “hefty fee” to Twitter for letting him walk away according to the law professor. But one thing is for sure: Twitter, Musk, and his banks all want this to end.
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