Here’s another pot joke about Elon Musk’s purchase price for Twitter that the Tesla billionaire may not find so funny: It’s at risk of getting higher and higher every day.
The $54.20 that Musk initially agreed to pay for each share of Twitter — a “420” marijuana reference by Musk that amounts to a $44 billion buyout of the company — is effectively ticking up by more than a penny per day thanks to a little-appreciated aspect of Delaware law, analysts tell The Post.
The extra payments — which amount to an extra $9 million per day when applied across all of Twitter’s outstanding shares — risk adding hundreds of millions of dollars to Twitter’s already sky-high price tag, according to financial experts who have studied the case.
That could be at least a minor bummer for Musk — whose net worth was recently pegged by Forbes at $260 billion — if a Delaware court orders him to go through with the Twitter deal following a trial that’s set to kick off Oct. 17.
Specifically, Twitter could try to force him to pay out additional “pre-judgment interest” to make up for lost time between the day when the deal was originally supposed to have closed and whenever it actually goes through.
Sept. 15 was the earliest possible closing date under terms of the deal, which stipulated that it could close two days after it was approved by shareholders. Twitter investors voted to approve the deal by a wide margin on Sept. 13.
Delaware’s pre-judgment interest rate accrues annually at the US Federal Reserve’s federal funds rate plus 5%. That means that Twitter’s price is effectively ticking up by about 1.1 cents a share per day, or $9 million, past Sept. 15, according to calculations that a hedge fund research analyst shared with The Post.
If Judge Kathaleen McCormick were to side with Twitter order Musk to go through with his original agreement to buy the site on Oct. 24, 39 days would have passed since pre-judgment interest began accruing.
That theoretical scenario could add roughly $350 million to Twitter’s price tag. Or if the case got caught up in appeals and specific performance were eventually ordered on Dec. 1, pre-judgment interest would total about $700 million. If the legal battle stretches into 2023, it could reach more than $1 billion.
It’s also possible that Elon Musk could win in court or negotiate a settlement with Twitter that doesn’t include pre-judgment interest. Alternatively, Judge McCormick could decide to start the accrual of pre-judgment interest at a date other than Sept. 15.
Since the pre-judgment interest rate is based on the federal funds rate, interest rate hikes by the Fed could also change the exact figure.
Twitter declined to comment. An attorney for Musk did not respond to a request for comment.