London Daily

Focus on the big picture.
Friday, Aug 08, 2025

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
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
OpenAI Launches GPT‑5, Its Most Advanced AI Model Yet
Embarrassment in Britain: Homelessness Minister Evicted Tenants and Forced to Resign
President Trump nominated Stephen Miran, his top economic adviser and a critic of the Federal Reserve, to temporarily fill an open Fed seat
The AI-Powered Education Revolution: Market Potential and Transformative Impact
Chikungunya Virus Outbreak in Southern China: Over 7,000 Hospitalized
French wine makers have seen catastrophic damage to vines that were almost ready to be harvested after the worst fires in more than 70 years burned through the south of the country
US Lawmaker Probes Intel CEO’s China Ties Amid National Security Concerns
Brazilian President Lula says he’ll contact the leaders of BRICS states to propose a unified response to U.S. tariffs
Trump Open to Meeting Putin as Soon as Next Week, with Possible Trilateral Summit Including Zelenskiy
Katy Perry and Justin Trudeau spark dating rumors, joining high stakes world of celeb-politician romances
US envoy Steve Witkoff arrived in Moscow to seek a breakthrough in the Ukraine war ahead of President Trump’s peace deadline
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Nine people have been hospitalized and dozens of salmonella cases have been reported after an outbreak of infections linked to certain brands of pistachios and pistachio-containing products, according to the Public Health Agency of Canada
Karol Nawrocki Inaugurated as Poland’s President, Setting Stage for Clash with Tusk Government
Trump Signals JD Vance as ‘Most Likely’ MAGA Successor for 2028
US Charges Two Chinese Nationals for Illegal Nvidia AI Chip Exports
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
U.S. Tariff Policy Triggers Market Volatility Amid Growing Global Trade Tensions
Tariffs, AI, and the Shifting U.S. Macro Landscape: Navigating a New Economic Regime
Representative Greene Urges H-1B Visa Cuts Amid U.S.-India Trade Tensions
U.S. House Committee Subpoenas Clintons and Senior Officials in Epstein Investigation
Sydney Sweeney Registered as Republican as Controversial American Eagle Ad Sparks Debate
Trump Accuses Major Banks of Politically Motivated Account Denials and Prepares Executive Order
TikTok Removes Huda Kattan Video Over Anti-Israel Conspiracy Claims
Trump Threatens Tariffs on India Over Russian Oil Imports
German Finance Minister Criticizes Trump’s Attacks on Institutions
U.S. Proposes Visa Bond of Up to $15,000 for Some Applicants
U.S. Farmers Increase Lobbying Amid Immigration Crackdown
Elon Musk Receives $23.7 Billion Tesla Stock Award
Texas House Paralyzed After Democrats Walk Out Over Redistricting
Mexican Cartels Complicate Sheinbaum’s U.S. Security Talks
Mark Zuckerberg Declares War on the iPhone
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
Tesla Seeks Shareholder Approval for $29 Billion Compensation Package for Elon Musk
Nvidia is cutting prices on its RTX 50-series graphics cards after sales slowed and inventories piled up
Ghislaine Maxwell Transferred to Minimum-Security Prison Amid Ongoing DOJ Discussions
U.S. Tariffs Surge to Highest Levels in Nearly a Century Under Second Trump Term
Matt Taibbi Slams Media for Role in Russiagate Narrative
Pilots Call for Mental Health Support Without Stigma
All Five Trapped Miners Found Dead After El Teniente Mine Collapse
Ong Beng Seng Pleads Guilty in Corruption Case Linked to Former Singapore Transport Minister
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
Italy Fines Shein One Million Euros for Misleading Sustainability Claims
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
Declassified Annex Links Soros‑Affiliated Officials and Clinton Campaign to ‘Russiagate’ Narrative
×