Column: Mr. Musk, $ 5 billion for Twitter acquisition “withdrawal” | Reuters

[New York 20th Reuters BREAKINGVIEWS]–Everyone has a “market price”. For Tesla CEO Elon Musk, that amount could be $ 5 billion. It’s the price you can afford to withdraw from the deal to buy Twitter for a total of $ 44 billion. Returning the agreement to a blank slate will prevent the two companies from protracted court battles and further confusion.

On May 20th, every person has a “market price”. For Tesla CEO Elon Musk (pictured right), that amount could be $ 5 billion. The photo is an image taken in April (2022 Reuters / Dado Ruvic)

On the surface, Twitter may want Mr. Musk to keep his promise to buy. In fact, when Mr. Musk reiterated his desire to suspend the plan, Twitter said so. However, if Mr. Musk takes a tough attitude, he may be forced to fight in court. Proceedings are costly, and reluctant buyers aren’t ideal partners anyway.

What’s more, Twitter’s Agrawal CEO has a business to manage, but Mr. Musk has already pointed out a potential problem with the company, which has already caused a difficult situation. Prolonging a broken agreement and affecting Twitter’s operations could be annoying to management for decades.

Mr. Musk has also lost considerable assets since the agreement to buy Twitter. Tesla has blown away its market capitalization of about $ 390 billion in just a few weeks. Mr. Musk has used part of Tesla’s stock to fund the acquisition of Twitter, and the fall in stock prices is a double pain.

In addition, Mr. Musk has denied reports that he sexually harassed flight attendants on a private jet in 2016 on the 20th.

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At this point, it seems better for Twitter and Tesla to agree to withdraw the deal. Twitter’s stock price has fallen since Musk announced the acquisition of the company’s stock. Suppose the deal is withdrawn and Twitter’s stock price loosely follows the Nasdaq Composite Index. In that case, Twitter’s market capitalization would be about $ 5 billion less than it was before Mr. Musk held Twitter shares.

If Mr. Musk continues to hold Twitter shares, the company cannot completely eliminate Mr. Musk. But Mr. Musk’s payments can be used to increase special dividends and cash holdings. Mr. Musk may not be afraid to get rid of the company he is bashing, even if he pays more than the $ 1 billion penalty set. Both companies can get out of difficult situations by taking action at a reasonable market price.

● Background news

* Mr. Musk said yesterday that he had temporarily put the acquisition of Twitter on hold until additional data on fake accounts was available. A few days later, he said he wouldn’t proceed with the acquisition until Agrawal CEO showed evidence that fake accounts accounted for less than 5% of users.

* Twitter stated in a statement that it intends to “conclude this project and execute the merger agreement.”

(I’m a columnist for “Reuters Breakingviews”. This column is based on my personal opinion.)

* Content such as news, transaction prices, data and other information in this document is provided by Reuters columnists for your personal use only and is provided for commercial purposes only. It’s not a thing. This content in this document is not intended to solicit or induce investment activity and is not appropriate for use in making decisions when trading or buying or selling this content. This content does not provide any investment, tax, legal or other advice as investment advice, nor does it make any recommendations regarding specific financial individual stocks, financial investments or financial products. The use of this document does not replace the investment advice of qualified investment professionals. Reuters makes reasonable efforts to ensure the reliability of the Content, but any views or opinions provided by the columnist are the columnist’s own views or analysis, not the views or analysis of Reuters.

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