Analysis: Why the banks financing Musk’s Twitter deal are unlikely to be able to help him walk away

An image of Elon Musk is seen on smartphone placed on printed Twitter logos in this picture illustration taken April 28, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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Aug 5 (Reuters) – The banks that agreed to finance Elon Musk’s $44 billion acquisition of Twitter Inc (TWTR.N) have a financial incentive to help the world’s richest person walk away but would face long legal odds, according to people close to the deal and corporate law experts.

Twitter has sued Musk to force him to complete the transaction, dismissing his claim that the San Francisco-based company misled him about the number of spam accounts on its social media platform as buyer’s remorse in the wake of a plunge in technology stocks. read more

The Delaware Court of Chancery, where the dispute between the two sides is being litigated, has set a high bar for acquirers being allowed to abandon their deals, and most legal experts have said the arguments in the case favor Twitter. read more

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Yet there is one scenario in which Musk would be allowed to abandon the acquisition by paying Twitter only a $1 billion break-up fee, according to the terms of their contract. His $13 billon bank financing for the deal would have to collapse.

Refusing to fund the deal would weigh on the banks’ reputation in the market for mergers and acquisitions as reliable sources of debt. However, the banks would have…

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