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Twitter: Elon Musk 'personally on the hook' for over $30 billion in equities

Wall Street Journal Senior Reporter Cara Lombardo comes on Yahoo Finance Live to discuss the latest developments in Elon Musk's acquisition of Twitter and how the Tesla CEO still plans to finance the deal.

Video Transcript


DAVID BRIGGS: All right, the latest in the juiciest saga in the business world, that, of course, the back and forth between Elon Musk and Twitter, will he or won't he? Elon's lawyers now asking a Delaware court to halt the upcoming trial, which starts October 17, over his deal to acquire Twitter at $54.20 per share. We have senior reporter for "The Wall Street Journal" Cara Lombardo with us to discuss what's next in this deal.

Cara, good to see you. You've been all over this deal. Will we see Elon Musk deposed as early as Monday?

CARA LOMBARDO: That's currently the big question. And I think that's why the two sides are deep in talks. They're hoping to, I believe, reach an agreement before then. I don't think either side wants to go through with that at this point. But still a possibility as of this moment.

SEANA SMITH: And, Cara, you've done some reporting here. You're now saying that Elon Musk-- reporting that Elon Musk is now saying that he wants this all contingent on whether or not he receives the necessary debt financing. What can you tell us about that and, I guess, just the likelihood or unlikelihood that that's going to happen given how different the market is today compared to how it was when he initially struck this deal?

CARA LOMBARDO: So that wasn't a condition of the initial deal. But interestingly, when his lawyers sent a two-sentence letter to Twitter on Monday surprising us all and saying, let's just do the deal on the original terms, he threw in this new financing condition. And so that is where the talks this week have really centered around.

Now, as far as the idea of the banks having an out, that is not something I'm hearing an awful lot about. I think that would be very unlikely. They have a reputational risk they would need to deal with if they were to try to pull out of this deal. I think it's more that it's just another bargaining chip for him in these negotiations at the moment.

DAVID BRIGGS: How short are estimates that Elon Musk-- how short is he of the $54.20 per share? How much Tesla shares do we figure he may have to sell?

CARA LOMBARDO: That's a great question. He's already sold a large chunk, as you know. And to finance his equity portion, he's personally on the hook for over $30 billion worth of equity. Now, he has a few friends and business acquaintances that have agreed to help with that. But they're not obliged to do it the way he is, so he may need to sell even more shares in the end.

SEANA SMITH: Cara, what's your best guess just in terms of whether or not this does go to trial, how long it could potentially take to close, and whether or not you have confidence that it will, in fact, close and go through this time?

CARA LOMBARDO: So right now, the two scenarios that I think people are looking at are the following. One, they could reach a deal this weekend ahead of Monday in which they agree to put the lawsuit on hold and hopefully close the deal by the end of the month. The other scenario involves they don't reach a deal. They go to trial. That's five days starting the week after next.

We'll probably get a decision within a few weeks. You would assume that if the decision is bad for Musk, he would probably appeal it. That would take a few additional weeks. We would probably have clarity by the end of the year. But then we'd still need to hold a potential vote on it if any of the terms changed or get all the conditions in place for the deal to close. So that would be a much more drawn-out close.

DAVID BRIGGS: Any sense if Elon is still trying to reduce this deal from the $54.20, the $44 billion price tag?

CARA LOMBARDO: So that's an excellent question. As you know, we reported-- before his letter on Monday saying let's just do it at the original price-- they were in deep discussions about a price cut. So any time there's negotiating going on between two sides, I just assume any term is-- any possible term change is still on the table. I wouldn't rule it out as things move around, but I haven't heard that it's a focus of the discussions as they stand today.

SEANA SMITH: Cara, we've been following your reporting very closely. We will continue to follow it. Thanks so much for hopping on with us and giving us the latest. Cara Lombardo of "The Wall Street Journal."