Elon Musk’s rocky $44 billion effort to acquire Twitter is in danger of failing after the Tesla CEO informed the board of Twitter on Friday that the deal is being terminated. An inquiry for comments from Twitter did not immediately get a response. It is unclear whether there will be a legal dispute over the arrangement or if Twitter’s board would accept the $1 billion breakup fee.
The potential collapse of the agreement is only the most recent twist in a story involving the wealthiest man in the world and one of the most powerful social media sites. Most of the controversy has taken place on Twitter, where Musk, who has over 95 million followers, has complained that the network isn’t living up to its promise as a place for free expression.
Twitter’s stock dropped 5% on Friday to $36.81, much below the $54.20 Musk had proposed to pay. Tesla’s stock, meanwhile, increased by 2.5 percent to $752.29 a share.
Musk claimed in a letter to the Securities and Exchange Commission that Twitter had “not complied with its contractual obligations” under the terms of the agreement, specifically by failing to provide him with enough data to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.”
Musk appears to start considering purchasing Twitter in late March. At that point, according to Twitter, he allegedly got in touch with the firm’s board members, including co-founder Jack Dorsey, and informed them that he was buying up shares and was considering either joining the board, taking Twitter private, or founding a rival business. Then, on April 4, he disclosed in a regulatory filing that he had acquired a 9 percent interest in the firm, valued at roughly $3 billion, making him the biggest stakeholder.
Twitter first offered Musk a position on its board. Six days later, however, Musk announced in a tweet that he would not be joining the board after all. After that, his acquisition proposal for the business rapidly came together.
Musk had agreed to purchase Twitter for $54.20 per share, adding the number “420” to his bid. To help pay for the acquisition, he sold shares in Tesla valued around $8.5 billion. He then increased his pledges from investors by more than $7 billion, including influential figures from Silicon Valley like Oracle co-founder Larry Ellison.
Inside Twitter, uncertainty and a decline in morale followed Musk’s public criticism of one of the company’s senior attorneys who was engaged in content-moderation decisions. Twitter management stopped recruiting, stopped discretionary spending, and removed two key managers as they were ready for the acquisition to go through. A member of the San Francisco company’s talent acquisition team was most recently among those let go.
Source: AP, Reuters Business Insider