In order to “avoid distress sales”
Musk is selling Telsa shares for nearly $7 billion
08/10/2022 10:03 am
According to his own statements, Elon Musk does not want to buy Twitter as planned in the spring. However, Twitter may use the judiciary to force him to do so. In order to be financially prepared for this eventuality, Musk sells a large block of Tesla shares.
In connection with the takeover dispute with Twitter, US billionaire Elon Musk has sold shares worth almost seven billion dollars (6.85 billion euros) in his electric car company Tesla. According to documents released by the US Securities and Exchange Commission, Musk sold around 7.9 million Tesla shares between last Friday and this Tuesday.
Musk clarified on Twitter that the Tesla share sale is related to the takeover dispute with the short message service. “In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t go along, it’s important to avoid a distress sale of Tesla stock,” the entrepreneur wrote.
Musk announced a $44 billion takeover of Twitter in April and sold $8.5 billion of Tesla stock in preparation for the deal. At the time, he tweeted: “No more Tesla sales planned after today.”
Potential $1 billion penalty
On July 8, however, Musk dropped the Twitter deal because of allegedly “false and misleading” information from the short message service. In particular, the richest person in the world accuses Twitter of having too few spam or fake accounts on the platform. Twitter described this justification as “hypocrisy” and wants to take legal action to force Musk to complete the contractually agreed purchase. Musk filed a countersuit last Thursday to defend against Twitter’s attempt to force him to buy it.
He argued in the lawsuit that the actual number of users who can be served ads on the platform is far fewer than the number the company claims. Twitter also withheld information to prevent “the fraud from being uncovered,” it said.
The Twitter leadership dismissed Musk’s allegations as inaccurate and unbelievable and reiterated that they intend to push through Musk’s announced takeover, even against his opposition. Observers consider a judicial defeat of the Tesla founder to be quite conceivable. Then he would have to raise the promised $44 billion and make a takeover bid to Twitter shareholders at the agreed price. It is also possible that the multi-billionaire would have to pay Twitter a contractual penalty of up to one billion dollars.