Elon Musk faces paying billions of dollars after backing out of Twitter deal, expert says
Elon Muskmay be on the hook for billions after abandoning his
- Musk walked away from the deal Friday, blaming its failure to disclose the number of fake accounts.
Elon Musk could face paying out billions of dollars after walking away from a deal to buy Twitter, an expert has warned.
He told the Pivot Podcast that Musk may be forced to pay the difference between the $44 billion he offered for Twitter and its value now, which stands at about $28 billion.
Musk faces a $1 billion break fee for walking away from the deal, but with Twitter's chairman planning extensive legal action, Galloway said that fee was now "moot".
"He owes shareholders $17 billion here … and the stock's probably going to crater at Twitter. This guy could be looking at a $20 billion judgement," Galloway said.
"Anyone with an IQ over 80 who has his ear would have said 'why are you doing this? This makes no sense'."
Musk's lawyers argued in a letter to Twitter that the company had breached its agreement by failing to accurately disclose the number of fake accounts on the platform.
However, Galloway said this was not a justification for abandoning the deal.
He said Musk's commitment to pay $54.20 a share for Twitter occurred in "a month of mania" and that because his "piggy bank" was now 40% smaller following a fall in Tesla shares, he was now using bots as an excuse to walk away.
Musk's net worth has fallen by $65 billion since he announced the Twitter takeover in April with
A group of experts told Insider on Saturday that Twitter has the edge in its dispute with Musk, but the company was more likely to try to negotiate a lower sum.
"The Twitter folks may think they're going to prevail in court, but they want to resolve the uncertainty," Chester Spatt, a professor of finance at Carnegie Mellon University's Tepper School of Business and a former chief economist at the Securities and Exchange Commission, told Insider.
"Or they feel that rather than incurring the costs [of a legal battle] that they maybe concede a little bit to help Musk save face."
Dan Ives, an analyst at Wedbush Securities, now valued Twitter at $30 per share, meaning the company is worth $23 billion, or $21 billion less than Musk agreed to pay.
"For Twitter, being in a 'Game of Thrones court battle' with the richest person in the world is far from the vision the company (and its board) saw in April," he wrote in a note to clients.
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