News from Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk acquisition of a social media platform Twitter Inc. (NYSE: TWTR) was one of the biggest topics in the investing world in 2022.

Musk offered to buy Twitter shares for $54.20 each, but the shares are trading around the $49 level. Benzinga recently spoke with Julien KlymochkoCEO and Chief Investment Officer of Acceleratea company offering ETFs and alternative investments.

Klymochko is used to analyzing mergers and often invests in the arbitrage opportunity of deals, or the amount that can be realized if the deal goes through. Klymochko recently estimated that he has invested in/analyzed over 2,500 mergers over the past 15 years.

Premium Twitter: Musk has offered to buy Twitter shares for $54.20 and the shares are trading below the price. Here’s what Klymochko had to say about the difference.

“Musk’s $44 billion leveraged buyout on Twitter is the biggest LBO of all time (by far). The financial package includes exceptional leverage, including $25.5 billion in debt and margin loan commitments,” Klymochko told Benzinga.

Klymochko said the market is pricing around a 70% chance of the deal closing successfully. Klymochko points to the risks of falling credit markets or a drop in Tesla’s stock price, as margin lending depends on the value of Tesla’s stock.

“Musk has agreed to put up a check for $21 billion. That’s an astronomical amount of money, even for the richest person in the world. He sold the shares of TSLA in addition to seeking partners to help finance this commitment.

Musk recently announced a filing with new investors as part of the takeover which included larry ellisonBinance, a16z and others.

Related Link: Why Twitter’s Share Price Is So Far From Musk’s Buyout Price

Can Elon Musk walk from Deal?: A popular topic highlighted on social media is whether Musk may decide to walk away from the planned acquisition.

“Musk has signed a definitive agreement, which is a legally binding agreement, to acquire Twitter for $54.20 per share. He can’t back out of the deal,” Klymochko said.

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If Musk pulls out of the deal, Klymochko said Twitter could sue and seek a court order to force him into the deal. If Musk is unable to secure the appropriate financing, he will have to pay a $1 billion reverse termination fee. A judge could award damages in excess of the $1 billion severance award, depending on several scenarios, Klymochko added.

“Other things that could cause the merger agreement to terminate include shareholders voting against (unlikely) and regulators blocking it (also unlikely).”

Summary of the Twitter offer: The previous record for a leveraged buyout was KKR & Cie (NYSE: KKR) and TPG Inc. (NASDAQ: TPG) is acquiring energy company TXU for $12 billion. TXU went bankrupt after the leveraged buyout.

The terms of the agreement to acquire Twitter pose some risk with the methods of financing and the link to Tesla shares.

Klymochko estimated that if the deal to acquire Twitter fails, shares of the social media platform could drop to around $30.

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