Just when we were all starting to think that the whole Elon Musk Twitter takeover ordeal was finally reaching its end, another potential loophole that was lurking somewhere in that mess was uncovered. According to a new report from Insider, many of Musk’s equity partners, who agreed to his original $44 billion Twitter offer, are now looking to exit the deal.

In the words of Andrea Walne from Manhattan Venture Partners:

“Everyone’s trying to get out of it, no one thinks the company should be valued at $44 billion.” 

In or Out?

Andrea’s probably right. Given Musk’s repeated public trashing of the company, followed by personal efforts to wriggle out of the deal, Musk is now looking at potentially overpaying for a company that he himself essentially tanked the value of. Twitter’s current market cap is $38.52 billion, but some analysts have it much lower than that, as low as the $10-12 billion range.

As he sought to exit the Twitter deal, Musk has made or amplified significant claims about the platform’s bot problems, staff and board issues, security flaws, and much more. Such claims could well mean that Twitter isn’t worth the $44 billion that Musk is scheduled to pay – and with no clear plan for how he’s going to rebuild the app’s reputation and get more people Tweeting, you can imagine that many of his equity partners a re-checking their math, questioning whether there’s any way that they can exit the process.

Well, here’s the clinch – there might not even be a process! According to Insider:

“Musk’s equity co-investors are obligated to provide the funds in the amounts promised, subject to essentially the same conditions under which Musk himself is obligated to fund the Twitter acquisition. However, the commitment letters the co-investors signed allow Musk, in his discretion, to reduce the investor’s obligation.”

So, it would seem like Musk can let go of them entirely if he wants, but would he? The bottom line here is that there’s a scenario where Musk is forced to let his investors out of the deal, which would then leave him short in his funding for the takeover. In the end, that would still see him paying up. Elon would still have to cough up the much-discussed $1 billion breakup fee, which would be a solid consolation for the Twitter peeps left to pick up the pieces.

The Wrap

After everything, the bottom line is that Musk can still get out of his $44 billion deal if he wants to go that route, which would kind of defeat the purpose of this whole back-and-forth. In response to Insider’s report, Musk’s attorney Alex Spiro said that the vast majority of Musk’s equity investors have been spoken to and are ‘all in’. Hopefully, this is just another hiccup because honestly, this drama has gotten so stale that 1-week old popcorn left in the sun would still be crunchier.

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Sources 

https://bit.ly/3g6LpDG