London Daily

Focus on the big picture.
Thursday, Sep 10, 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
Buckingham Palace Says Prince Harry and Meghan Will Not Resume Official Royal Duties
UK Treasury Faces Calls to Scrap £100,000 Childcare Support Threshold
Trades Union Congress Urges Labour Government to Rewrite Migration Policy
Riot Police Deployed After Anti-Migrant Protests Turn Violent in Portsmouth
UK Considers Replacing Some Disability Cash Payments With Direct Services
JPMorgan’s Jamie Dimon Warns UK Chancellor Against Higher Banking Taxes
UK Announces New Sanctions Targeting Israeli Settlements in West Bank
Metropolitan Police Investigate Alleged Illegal Donations to Reform UK
UK Charges Wiltshire Man With Assisting Russian Intelligence
UK Orders Urgent Review After Air Traffic Failure Cancels More Than 2,000 Flights
Merz Rebukes AfD Expansion in Saxony-Anhalt
King Charles Confirms Prince Harry and Meghan Will Remain Private Citizens
Labour Selects Former Child Refugee for By-Election in Keir Starmer’s Former Seat
Foreign Private Equity Accelerates Takeovers of London-Listed Industrial Companies
NHS Maternity Care Faces Scrutiny Over Support for Mothers After Caesarean Births
BBC Warns Staff Strikes Are Likely Amid Job Cuts and Programme Cancellations
English Housing Affordability Improves to Best Level in More Than a Decade
UK Health Commission Proposes Framework for Wider AI Adoption Across NHS
Labour Faces Pressure for Wealth Tax Ahead of Autumn Budget
Metropolitan Police Open Criminal Investigation Into Alleged Foreign Donations to Reform UK
UK Police Deploy Riot Officers After Anti-Immigration Unrest in Portsmouth and Dover
UK Defends Sanctions on Israeli Settlements Despite Diplomatic Retaliation
UK Air Traffic Control Failure Cancels More Than 1,000 Flights and Disrupts 65,000 Passengers
Compass Urges £10 Million Wealth Tax and Public Ownership Ahead of UK Autumn Budget
UK Government’s Devolution Plans Face House of Lords Scrutiny
Maldives Seeks New Chagos Sovereignty Talks With UK Prime Minister Andy Burnham
UK Airports Face Continuing Disruption After National Air Traffic Control Failure
UK Bans Imports From Israeli Settlements and Expands Sanctions on Iran
British Chambers of Commerce Forecasts UK Growth of 1% as Investment Remains Weak
UK Suspends Local Government Reorganisation Decisions and Cancels Planned Shadow Authority Polls
UK Parliament Opens Inquiry Into Gaps in Climate Change Preparedness
Andy Burnham and Xi Jinping Hold Talks on Trade, Security and British Consular Cases
UK Joins France, Canada and Other Nations in Measures Against Israeli West Bank Settlements
UK Announces New Sanctions Targeting Iranian Nuclear and Military Networks
British Chambers of Commerce Calls for Business Rate Reform and Productivity Support
UK Farmers Warn Dry Summer Could Reduce Crop Yields and Push Up Food Prices
UK Rail Networks Hit by Widespread Delays After Major Signalling Failures
Matt Clifford Resigns as ARIA Chair After Conflict-of-Interest Scrutiny
UK and France Say Joint Border Operations Have Prevented More Than 48,000 Irregular Channel Crossings
UK Core Inflation Remains Above Expectations as Utility and Commodity Costs Stay Elevated
Jaguar Land Rover Considers Up to 4,000 UK Job Cuts Amid Automotive Industry Pressure
UK Government Pauses Local Authority Reorganisation for Legal Review
UK Public Borrowing Reaches £1.8 Billion in July, Adding Pressure Before Autumn Budget
Chancellor John Healey Puts Regional Devolution and Fiscal Discipline at Heart of UK Growth Plan
Counter-Terrorism Police Lead Salford Investigation After Two Teenagers Charged
UK Rejects Financial Reparations for Transatlantic Slavery
UK and Egypt Step Up Diplomacy Over Escalating West Bank Tensions
UK Pauses Council Reorganisation Across Four English Counties
Jaguar Land Rover Plans 4,000 Job Cuts in Major UK Restructuring
UK Unveils Planning and Regulatory Overhaul to Speed Infrastructure and Economic Growth
×