Elon Musk, the chief executive officer of Tesla and the world's richest person, said on Friday he was terminating his $44 billion deal to buy Twitter because the social media company had breached multiple provisions of the merger agreement.
"The contract calls for Musk to pay Twitter a $1 billion break-up if he cannot complete the deal for reasons such as the acquisition financing falling through or regulators blocking the deal. The break-up fee would not be applicable, however, if Musk terminates the deal on his own.
Their quote makes no sense and is missing significant nuance; what would keep him from terminating on his own if he can't get the financing to save the $1b. From the Wall Street Journal (behind a paywall):
The tech entrepreneur is seeking to terminate his deal to buy the social-media company, saying it hasn’t provided data he needs to assess the prevalence of fake accounts, according to a regulatory filing.
At a minimum, Mr. Musk could be on the hook for a $1 billion breakup fee, based on the terms of his April 25 acquisition agreement with Twitter. But the deal gives him only limited leeway to walk away and pay only that amount—and it isn’t clear that his complaints about Twitter’s account data qualify. The agreement gives Twitter the right to try to force him to follow through on the acquisition if he seeks to cancel it for other reasons.
Musk can in theory walk away without paying a fee, but only for very limited reasons, which is what he is arguing that Twitter “is in material breach of multiple provisions of that agreement” and appears to have made “false and misleading representations.”