London Daily

Focus on the big picture.
Monday, Mar 30, 2026

What are Elon Musk’s options in the Twitter takeover deal?

What are Elon Musk’s options in the Twitter takeover deal?

The Tesla chief says the deal cannot go ahead unless the platform proves that fewer than 5% of users are bots

Elon Musk has said his $44bn (£35bn) planned takeover of Twitter cannot progress until the microblogging platform proves that fewer than 5% of its users are fake or spam accounts. There is a strong chance the world’s richest person could try to walk away from the deal or to negotiate a lower price than the agreed $54.20 a share.

This raises questions about what actions Musk can take under the terms of the deal he signed last month with Twitter, which experts say gives the Tesla chief executive limited room for manoeuvre.


Is the deal legally binding?


Yes it is, and it is very detailed. For all the talk from Musk of putting the deal on hold or negotiating a lower price, he has committed himself to the takeover at $54.20 a share by signing a formal agreement. It is going to be difficult to wriggle out of it. As section 6.3 (a) states: “The parties hereto will use their respective reasonable best efforts to consummate and make effective the transactions contemplated by this agreement.”

It is a standard clause, according to Brian Quinn, an associate professor at Boston College law school, but has bite. “In all contracts, there is an implied obligation of good faith and fair dealing. Musk agrees to use his ‘reasonable best efforts’ to get the deal done. He can’t torpedo the deal by simply refusing to continue,” Quinn said.


Does the bot issue change the deal’s terms?


Musk indicated on Monday that his concerns about fake or spam accounts on Twitter – that the actual numbers are higher than Twitter estimates – could constitute a “material adverse misstatement”, if it emerges that the platform’s fake or bot accounts amount to far more than 5% of its 229 million user base. Musk could argue that, if it transpires Twitter has much higher-than-expected fake or spam account numbers, it constitutes a “material adverse effect” and he should be allowed to walk away from the agreement.

However, the adverse effect clause is difficult to get past a court. In one exceptional case in the state of Delaware – the jurisdiction of the Twitter deal – a judge allowed a company to scrap a deal because a whistleblower revealed fraud at the selling business. But Musk is on much trickier ground. Twitter has flagged the 5% figure in its quarterly results for the past eight years, with the caveat that the true number could be higher.

Musk knew what he was signing up for, Quinn said. “Bots are a well-known problem on Twitter. Musk even pointed to getting rid of bots as one way his ownership would add value to the business. Now, he is apparently shocked that there are bots on the platform? It’s a weak pretext with no legal legs.

“Also, Twitter’s disclosure to the US Securities and Exchange Commission with regard to bots is sufficiently hedged that a buyer should reasonably know that it might be higher than 5%.”

Morgan Ricks, professor of law at Vanderbilt Law School, adds: “Nothing that has happened so far comes anywhere close to a material adverse effect. Musk’s comments about fake accounts are an irrelevant sideshow.”


Can Musk unilaterally seek a lower price?


No, but there is a scenario where one could be negotiated. If Musk were to walk away Twitter would probably hold his feet to the fire, suing him in Delaware under the terms of the deal. As the litigation rolls on both parties could seek to negotiate a new price. However, in a strictly legal sense, Musk’s hand is not strong.


Can Musk just walk?


Again, no. The deal agreement not only includes a $1bn break fee if Musk does quit, but Twitter can also enact a clause that could force Musk to complete the deal at $54.20 a share. Section 9.9 of the agreement entitles Twitter to “specific performance”, whereby Musk has to pay up if he still has the debt-financing in place and Twitter still wants to close the deal. Twitter is in control here, Quinn said. “The remedy – a termination fee or specific performance is at the election of the company, not Musk,” he said.

Vanderbilt’s Ricks adds: “If Musk isn’t willing to close at $54.20 and if the parties can’t reach a revised deal or settlement, Twitter will very likely sue for specific performance.”Twitter, for its part, remains committed despite Musk’s behaviour. In a statement on Tuesday it said: “Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable.”


Will Musk be able to take over a major company again?


Whatever happens with Twitter, Musk’s actions in recent weeks will have alarmed boardrooms around the US and the world. Ricks says Musk might find some tougher conditions attached to the next attempted takeover. “Any board selling their company to Musk should insist on an extremely high break fee and make him put it into an escrow account upfront.”

Newsletter

Related Articles

0:00
0:00
Close
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
UK Housing Divide Deepens as Older Owners Hold Wealth While Under-30s Face Mounting Barriers
London Demonstration Calls on UK to Recognize Iranian Opposition’s Provisional Government
UK Green Party Vote on ‘Zionism is Racism’ Motion Collapses Amid Internal Disputes and Technical Failures
SNL UK Ignites Debate with Sharp Royal Satire Targeting Prince Andrew and Prince William
EU Proposes ‘Emergency Brake’ to Resolve Deadlock in UK Youth Mobility Talks
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
UK Museums House More Than 260,000 Human Remains, New Report Reveals
Surging UK Gilt Yields Reflect Inflation Pressures and Fiscal Uncertainty
UK Issues Updated Guidance on Children’s Screen Time with Focus on Balance and Wellbeing
UK Migration Figures Show Shifting Trends Across Asylum, Visas and Channel Crossings
UK Watchdog Launches Probe into Five Firms Over Alleged Fake Reviews and Ratings
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
Trump Urges Stronger Defence Investment as He Questions Allied Naval Capabilities
New COVID Variant Detected in UK Raises Concerns Over Vaccine Effectiveness
FTSE Russell Moves to Standardise Free-Float Rules for UK and International Listings
HBO Max Launches in UK and Ireland, Marking Major Step in Global Streaming Expansion
UK Signals Readiness to Seize Russian ‘Shadow Fleet’ Vessels in Escalation of Sanctions Enforcement
Escalating Middle East Conflict Seen as Major Threat to UK Economic Stability
Early Challenges Mark Prince Harry and Meghan’s Australia Visit
UK Government Rejects Cover-Up Claims After Theft of Former PM Aide’s Phone
Cyprus Opens Strategic Talks with UK Over Sovereign Base Areas
UK Faces Risk of Sharp Inflation Surge Despite Stable Pre-Crisis Figures
UK Police Arrest Two Over Suspected Antisemitic Arson as Iran Link Investigated
UK Inflation Holds at Three Percent Ahead of Oil Price Shock from Iran Conflict
×