While Elon Musk and Twitter have reached an agreement to sell the platform to Musk, the terms of this agreement also included the penalty that would be imposed if the agreement was canceled. Accordingly, the party canceling the agreement will be obliged to pay a substantial amount of compensation to the other party.
On Monday, April 25, the whole world got the news of the expected purchase. Elon Musk, CEO of Tesla and SpaceX companies and the richest person in the world, agreed to buy Twitter for approximately $ 44 billion. As part of the deal, Musk valued each Twitter share at $54.20, which is currently $49.68.
Well, while Elon Musk’s purchase of Twitter continues to divide people, what will happen to Musk and Twitter if this purchase is canceled for any reason? The US Securities and Exchange Commission (SEC) document explains what penalties both parties will face in the event that this purchase agreement, which causes volatility in the market, is canceled.
If the deal is canceled, $1 billion will be paid to the other party.
The document, shared on the same day as Elon Musk’s purchase news, revealed that if Twitter or Elon Musk cancel the agreement, they will be fined. According to the document, if either party decides to cancel the deal, it will be obliged to pay $1 billion to the other party.
However, the document also reveals that the deal may be terminated if the purchase is not made by October 24, 2022. However, it is also stated that the period may be extended by 6 months in order to meet the requirements of the antitrust law. The same document states that Twitter may also receive different purchase offers until the acquisition is completed, but if an agreement is reached, the new buyer must meet the $1 billion payable to Musk for the termination of the agreement with Elon Musk.