Musk said Friday he was terminating his $44 billion offer for Twitter, citing “material breach of multiple provisions” of the agreement and alleging Twitter failed to respond to multiple requests for information on fake or spam accounts on the social media platform.
Bret Taylor, chair of Twitter’s board, said 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.”
The Washington Post first reported in July that Musk’s team had stopped some discussions about funding for the deal, raising serious concerns about the data “fire hose” sent over from Twitter. Musk has been critical of Twitter and the prevalence of spam accounts on the social media site.
But Twitter’s share price has also plummeted since he first announced his takeover bid.
It’s unclear if Musk will be able to walk away over his concerns about spam accounts alone, and Musk could still be on the hook for $1 billion, even if he convinces a judge to let him back out of the deal.
Musk had until Oct. 24 to close on the $44 billion deal or pay a $1 billion termination fee. With an estimated net worth well north of $200 billion, the entrepreneur should have no trouble absorbing the loss.
Musk had plenty of reasons to get cold feet, one of which was the incidental damage his ownership risked inflicting on his other businesses.
Owning and operating Twitter comes with unavoidable controversy, and the spillover to Tesla, whose stock fell roughly 20% soon after Musk forced the Twitter sale, presumably wasn’t worth the risk.
The deal would have also forced the self-proclaimed “free speech absolutist” into an uncomfortable confrontation with China, where, despite a ban, the social network remains a thorn in Beijing’s side.
With the deal off the table, maybe the world’s richest man will get around to completing some of his other side projects.