No-- the $1B was liquidated damages in the case the deal couldn't close for other reasons (regulatory, unable to finance). It didn't give Elon a blanket "out"-- the deal explicitly had a very strong "specific performance" term.
I was half expecting Musk to "fail to find financing" in a way that had plausible deniability, just so he could use the $1 exit clause.
But that wouldn't have saved him from discovery in the court case, and I've also heard rumours the SEC were already looking into him for stock market manipulation over this Twitter thing.
His financing was committed at the time he signed the merger agreement, and the banks that agreed to lend it were pretty tightly committed to the deal. They also have their own separate legal exposure and risk to their franchises if they refused to fund the debt at closing.
If the financing failed to show up through no fault of the acquirer, then yes, the acquirer could terminate and pay a $1 billion break fee. But there have been recent Delaware cases that suggest an acquirer manufacturing grounds for its lenders to refuse to fund will not excuse the acquirer’s obligation to buy the company - regardless of whatever limited termination fee is written into the contract.
I was more than half expecting Musk's financiers to smell the bullshit and run screaming. He's already talking bankruptcy so I'm still wondering why they went forward.
Well, depends on the backing they got from Musk, doesn't it? And honestly, who would have believed someone would burn 44 billion, including 13 billion in dept, so fast to a complete pile of ash? I do wonder so, with a lot of Tesla's success depending on Musks reputation and ability to raise money, what the fallout of this will be. Until the Twitter desaster, Musk was a sure bet for investors. Now? Well, his financing banks wanted 60 cent per dollar when selling the debt on to investors. And they were only offered 50 cent. That alone tells you a lot.
