Elon Musk’s stormy US$44 billion bid to buy Twitter is on the brink of failure after Tesla’s chief executive sent a letter to Twitter’s board saying he was scrapping the acquisition.
Twitter’s board chairman, Brett Taylor, tweeted on Friday that the board is “committed to closing the transaction at the price and terms agreed upon with Mr. Musk and plans to take legal action to enforce the merger agreement.” We are confident that we will prevail in the Delaware court.”
Twitter could have demanded a $1 billion breakup fee, which Musk agreed to pay under the circumstances. Instead, it appears ready to fight for the deal, which the company’s board approved and CEO Parag Agrawal insisted he wants to go through.
The eventual unraveling of the deal is just the latest twist in the 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 95 million followers, complaining that the company is failing to live up to its potential as a platform for free speech.
On Friday, Twitter shares fell 5 percent to $36.81, well below the $54.20 Musk had offered to pay. Meanwhile, Tesla shares rose 2.5% to $752.29.
In a letter to the Securities and Exchange Commission, Musk said Twitter “failed to meet its contractual obligations” around the deal, namely to provide Musk with enough information to “make an independent assessment of the prevalence of fake or spam accounts on the platform.” Twitter’.
Major shareholder
Musk’s flirtation with buying Twitter appears to have started in late March. At the time, Twitter said it had contacted its board of directors — including co-founder Jack Dorsey — and told them it was buying back shares in the company and was interested in either joining the board, taking Twitter private or creating a competitor.
Then, on April 4, he revealed in a regulatory filing that he had become the largest shareholder in the company after acquiring a nine percent stake worth about US$3 billion.
Twitter initially offered Musk a seat on its board. But six days later, Twitter CEO Parag Agrawal tweeted that Musk would not be joining the board after all. His bid to buy the company came together quickly after that.
WATCH | Musk’s deal with Twitter raises concerns:
Elon Musk’s deal with Twitter sparks debate over free speech
Calling himself a “free speech absolutist,” Elon Musk’s deal to take over Twitter has reignited the debate surrounding free speech on social media platforms. Some fear that under Musk’s ownership, Twitter could be used as a platform to spread disinformation and monitor critics.
Musk had agreed to buy Twitter for $54.20 a share, inserting a reference to “420” marijuana into the bid price.
He sold about $8.5 billion worth of shares in Tesla to help finance the purchase, then stepped up commitments to more than $7 billion from a diverse group of investors, including Silicon Valley heavyweights like the Oracle co-founder Larry Ellison.
On Twitter, Musk’s proposal 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 to move the deal forward, the company froze hiring, halted discretionary spending and fired two top executives. The San Francisco company is also laying off staff, most recently part of its talent acquisition team.
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