Four years ago, Elon Musk vowed to set up a peanut brittle company to take on Warren Buffett’s iconic See’s Candies. Then he changed his mind. It wouldn’t be surprising if the deal to buy Twitter went the same way, write TheRealLSL, GinaChon:
is shored up. The agreement includes a fee of $1 billion that he – or Twitter – would have to pay if they renege on the contract. And Twitter’s lawyers even wedged in a so-called “specific performance” clause, which could theoretically force Musk to buy the company if he threatens to back out, though in practice this could probably be settled by adding to the break fee.
There are good reasons for him to get cold feet. The biggest is Tesla. The electric-vehicle maker’s stock has fallen around a fifth since Musk first revealed his stake in Twitter, partly because Musk may sell shares to fund his new adventure. If Tesla’s stock bounces back – likely if the Twitter deal falls away – the $40 billion of recouped wealth would more than make up for the break fee.too. Tesla produces half of its vehicles there, as well as a quarter of its revenue.
In reality, Musk’s absolutism probably won't survive a Twitter deal anyway. European Union Commissioner Thierry Breton told the Financial Times this week that the company must police illegal or harmful content or risk being banned. In the United States, where regulators are less aggressive, other technology firms could effectively create the same threat. Apple, for example, gets to decide which apps appear in its influential store.
One thing makes it easier for Musk to walk away before any of this becomes a problem: The market partly anticipates it already. Twitter’s stock is currently trading 11% below his offer price – a fairly wide spread for a deal with little antitrust pushback. Musk’s tweets criticizing some company actions – potentially flouting the merger agreement - already suggest he might be starting to lose interest. Most likely, Musk's attention will wander elsewhere. It wouldn't be the first time.
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