Announcements are one thing and contracts are another. American businessman Elon Musk has claimed he wants to buy Twitter to protect freedom of speech. But Musk himself has agreed to bite his tongue and not criticize the social network on Twitter, while he completes the process to acquire the company. That’s according to the terms of the merger, filed on Tuesday to the US Securities and Exchange Commission (SEC).
As is to be expected in this type of deal, the contract regulates what can be said about the acquisition. The general principle is that the two parties should consult one another and agree on press releases and other statements. What is not usual is the end of that clause of the contract: “The Equity Investor [Elon Musk] shall be permitted to issue Tweets about the Merger of the transactions contemplated hereby so long as such Tweets do not disparage the Company or any of its Representatives.”
The Tesla founder is a compulsive Twitter user and has been practically live-tweeting his every movement – from his initial purchase of 9% of shares to the final agreement to purchase the company for $54.2 a share, or $44 billion in total. In recent weeks, Musk has gained more than five million followers on Twitter and now has a total of more than 87 million. Up until now, Musk has never been shy about criticizing Twitter or its executives and its decisions.
The extreme antibody reaction from those who fear free speech says it all— Elon Musk (@elonmusk) April 26, 2022
On Tuesday, Musk tweeted: “By ‘free speech,’ I simply mean that which matches the law. I am against censorship that goes far beyond the law.” Or that goes beyond the contract, given his companies often require workers to sign confidentiality agreements or clauses to prevent them from discrediting the businesses or presenting Musk as anything less than the “free speech absolutist” he describes himself as.
While the deal does not stipulate what will happen if Musk breaks this clause, it does include a $1-billion termination fee. This applies to both parties. For example, if Musk is unable to close the financing to carry out the operation, he will have to pay Twitter $1 billion. But if Twitter breaks the agreement and does not recommend shareholders vote in favor of the operation or if it ends up accepting a competing offer, it will have to pay Musk the termination fee. The end date for the operation is October 24, but it can be extended for another six months.
Meanwhile on Tuesday, Tesla share prices fell 12%, wiping $126 billion off its valuation. Some analysts said the drop was due to fear that Musk would sell some of his stocks in Tesla to finance the purchase of Twitter.