Because if he didn't think the government would approve the deal, he shouldn't have made the offer in the first place. By making the offer he is creating a massive amount of distraction and uncertainty for the company-to-be-acquired, and if in the end the deal is voided because the government blocks it, then the company-to-be-acquired need to be compensated for all the wasted time and effort that went into a failed deal.
This is very common in large acquisitions and mergers. Remember, Must didn't have to include the $1B walk-away fee. But if he didn't, then the board may have been much less likely to accept the offer.
The lawyers came up with the terms and contingencies. Once signed, you're expected to hold up your end of the deal. I'm sure the lawyers have experience with court-cases / whatnot and have the precise court-cases which led to this style of agreement... but that doesn't matter anymore.
Musk agreed to it, so it must be upheld in that manner.
ATT had to pay T-Mobile when their deal fell through due to the government. Look at this way Twitter just made a whole bunch of business decisions based somewhat/mostly on Musk's takeover. If he pulls out, Twitter will be hurt financially. Or suppose it was a hostile takeover by a competitor - they could fein a takeover - hurt their competitor - then walk away.
I don't think he did. Section 8.3 deals with the termination fee and it doesn't list 8.1(b)(i) as a reason it gets paid. 8.1(b)(i) is the government blocking.
mediaman’s comment (and the article they linked) says that the government blocking the deal is one of the limited circumstances in which Musk wouldn’t have to pay.
I may have been unclear. He wouldn't have to buy Twitter if the government prevented it, but he would be required to pay $1b. Outside of those circumstances, he is contractually forced to buy Twitter.
The government issue and the money issue are basically the two scenarios in which Musk would be unable (not just unwilling) to complete the transaction. So that's where he has to pay the fee. Otherwise, he can't change his mind.
No, I think you were clear, and I wasn't. :) I understood that it was more "he won't be on the hook to buy Twitter if the government prevented it but there's still a kill fee," but bungled describing it.
(I know "kill fee" isn't the right term, but that's what we'd call the equivalent in publishing!)
