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: If Elon Musk and Twitter don’t complete their deal, one of them will have to pay $1 billion

If Tesla Inc. Chief Executive Elon Musk doesn’t end up owning Twitter, one of the two entities is going to collect $1 billion.

Filings with the Securities and Exchange Commission made public Tuesday afternoon show a $1 billion breakup fee that goes both ways. The filing specifically states that the deal should be done within six months, by Oct. 24, though that deadline could be extended another six months if the deal is held up by regulators.

Musk will owe Twitter

$1 billion if he fails to consummate the deal once it is ready to close, or if Musk breaches the agreement in a way that precludes the deal from closing. Twitter would owe Musk $1 billion if shareholders vote against the deal or another entity steps in with an offer that the board accepts instead of Musk’s. The deal includes a “no shop” provision that will preclude Twitter’s board from seeking a better deal, and the board is also precluded from suggesting stockholders vote against the deal, absent certain exceptions.

Twitter announced Monday that it had accepted Musk’s $44 billion offer to take the company private. The deal will include debt financing from Morgan Stanley and other banks as well as $21 billion from Musk that will come from a loan using his Tesla

shares as collateral; Tuesday’s filing included fresh letters crafted early this week detailing that financing.

The filings also included a letter Musk sent to Twitter Chairman and Salesforce Inc.

co-CEO Bret Taylor on Sunday night outlining the offer. That letter noted that Musk had given the Twitter board the option of recommending against the bid but allowing shareholders to vote on it anyway.

“I have attached a merger agreement that is ‘seller friendly’ and that does not require you to recommend in favor of my offer,” he wrote. “This will provide all shareholders a voice, and allow for a democratic decision consistent with Twitter’s ethos.”

In the end, Twitter’s board unanimously voted to accept Musk’s offer.

Tuesday’s filings also laid out plans to offer cash for pending stock options.

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