Elon Musk has terminated his $44 billion deal to acquire social media giant Twitter.
In a filing submitted to the U.S. Securities and Exchange Commission, attorneys for Musk alleged the social media company is "in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement," and says Musk will likely suffer financially as a result.
The news was first reported by Reuters on Friday.
The Tesla CEO sent a letter to Twitter’s board saying he is terminating the acquisition.
But Twitter isn’t accepting Musk’s declaration. The chair of Twitter’s board, Bret Taylor, tweeted in response that the board is “committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.”
Twitter could have pushed for a $1 billion breakup fee that Musk agreed to pay under these circumstances. Instead, it looks ready to fight to complete the deal, which the company’s board has approved and CEO Parag Agrawal has insisted he wants to consummate.
The possible unraveling of the deal is just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms. Much of the drama has played out on Twitter, with Musk — who has more than 100 million followers — lamenting that the company was failing to live up to its potential as a platform for free speech.
On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 that Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5% to $752.29.
Musk’s flirtation with buying Twitter appeared to begin in late March. That’s when Twitter has said he contacted members of its board — including co-founder Jack Dorsey — and told them he was buying up shares of the company and interested in either joining the board, taking Twitter private or starting a competitor. Then, on April 4, he revealed in a regulatory filing that he had became the company’s largest shareholder after acquiring a 9% stake worth about $3 billion.
At first, Twitter offered Musk a seat on its board. But six days later, Twitter CEO Parag Agrawal tweeted that Musk will not be joining the board after all. His bid to buy the company came together quickly after that.
Musk had agreed to buy Twitter for $54.20 per share, inserting a “420” marijuana reference into his offer price. He sold roughly $8.5 billion worth of shares in Tesla to help fund the purchase, then strengthened his commitments of more than $7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.
Inside Twitter, Musk’s offer was met with confusion and falling morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content-moderation decisions.
As Twitter executives prepared for the deal to move forward, the company instituted a hiring freeze, halted discretionary spending and fired two top managers. The San Francisco company has also been laying off staff, most recently part of its talent acquisition team.
This is a developing story. Please check back for updates.