Elon Musk purchase of Twitter has $1B termination fee for both sides
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Twitter (NYSE:TWTR) will be required to pay a deal termination fee of $1 billion to Elon Musk if the social media company ends the $44 billion deal. Twitter fell 1.6% in after hours trading.
Alternatively, Musk would be required to pay Twitter (TWTR) a reverse termination fee of $1 billion if the deal is cancelled by the Tesla (TSLA) founder and billionaire due to certain conditions, according to the merger agreement. The deadline for the deal to be completed is October 24.
"... If the conditions to Parentâs and Acquisition Subâs obligations to complete the Merger are satisfied and Parent fails to consummate the Merger as required pursuant to the Merger Agreement, including because the equity, debt and/or margin loan financing is not funded, Parent will be required to pay Twitter a termination fee of $1.0 billion," according to the filing. 
Twitter is scheduled to report 1Q results on Thursday. Twitter (TWTR) shares fell almost 4% on Tuesday, a day after the $54.20/share Musk purchase was announced as some investors may be concerned that the deal needs approval from several jurisdictions around the world, including U.S. antitrust approval, and the SEC will be closely examining the deal-related filings.
Investors also pushed Tesla (TSLA) to its lowest level in eight weeks as they weighed the impact of Musk buying Twitter (TWTR). While TSLA would have to fall another 40% for Musk to see a margin call on his pledged shares used to help finance the Twitter purchase, some traders see an overhang with Tesla more closely tied to potential geopolitical battles over the social media site.
Musk had reportedly lined up $46.5 billion in committed financing, including $21 billion in equity commitment from Musk himself. Musk and Twitter's team were said to have worked through Sunday night into Monday, in order to finalize walk-away details around the acquisition plan.
Twitter (TWTR) can force Musk's equity financing commitment to be funded if the debt and margin loan financing is funded or available, according to the merger agreement.
With Musk set to take control of Twitter (TWTR) in the coming months and his plans not yet fully laid out, many are asking what's next for the embattled social network.