Elon's worried about the proportion of bots on Twitter, or so he says.
๐ Background: So, we know Elon Musk is finalising his deal to buy Twitter after a pretty aggressive acquisition approach. He's also been quite vocal about implementing a new free speech policy, as well as cleaning up Twitter's bot problem.
๐ What happened: Twitter says less than 5% of its users are spam bots (aka fake accounts that mimic real people). Musk is calling BS (literally, he sent the current CEO a poo emoji). So, he's put the deal on hold pending details that support Twitter's estimate.
๐ What else: He say's he's still committed, but if the deal fails Elon might have to pay a $1 billion breakup fee.
๐ก A breakup fee is used in takeover agreements, generally to stop a seller from backing out of a deal. They're usually 1-3% of the deal's value- a hefty hit.
๐กMergers and acquisitions can take months (or even years) to complete, and they require a lot of resources to facilitate. Think lawyers, PR professionals etc. So, breakup fees are included in contracts to motivate the seller to close the deal.
๐กIn Elon's case, this would be a reverse breakup fee payable by the buyer. They're becoming more common as competition heats up in public offerings.
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