According to a new filing with the US Securities and Exchange Commission (SEC), Tesla CEO Elon Musk will have to pay Twitter a $1 billion termination fee if he abandons the $44 billion takeover deal.
The filing also stated that if the microblogging platform terminates its takeover deal, it will be required to pay the same amount.
“Upon termination of the Merger Agreement under specified limited circumstances, Twitter will be required to pay Parent a termination fee of $1 billion,” according to the SEC filing.
“Musk will be required to pay Twitter a termination fee of $1 billion,” if he cancels the deal.
Morgan Stanley and other financial institutions have committed to providing $13 billion in financing, as well as $12.5 billion in margin loans to Musk, against his shares in Tesla and other companies, as part of the agreement.
Musk is expected to provide $21 billion in equity financing on his own.
If Musk’s financing fails, Twitter will receive $1 billion.
With Musk’s $44 billion acquisition of Twitter, advertisers are already having nightmares about how his ‘free speech’ initiative could kill their prospects on the platform by allowing their brand’s name to appear alongside hate speech, abusive or dangerous content without moderation.
Online speech, according to The Verge, is a minefield.
“If Musk really intends on a minimally moderated Twitter worldwide, he could expect huge fights in countries that restrict things like hate speech and false information,” said the report.
Another source of concern is recommendation algorithms that potentially biasedly amplify or downrank tweets and accounts.
Musk wants to make the algorithm “open source,” but he hasn’t specified how he intends to meet the requirements of an open source licence, “so he could mean it in a more informal sense.”
Musk has also explained how he plans to incorporate developer suggestions into Twitter’s algorithm.
