Elon Musk is officially trying to pull out of his $44 billion agreement to purchase Twitter. In a filing Friday afternoon, Musk claimed that he was backing out of the deal because Twitter was in “material breach” of their agreement and had made “false and misleading” statements during negotiations.
Musk has been setting the stage to abandon the deal since just weeks after he signed the agreement, claiming that Twitter released misleading stats about the prevalence of spam bots on its platform.
Twitter stocks fell by 7.4% on Friday amidst the news of the termination of the merger agreement.
The Billionaire entrepreneur agreed to the deal to buy Twitter Inc. for $44 billion in April, using one of the biggest leveraged buyout deals in history. The powerful social networking platform that has become a town square for public discourse and a flashpoint in the debate over online free speech was supposed to go private after the buyout transaction was complete.
Twitter, Inc. (NYSE: TWTR) subsequently announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion.
The price is 38% more than the stock’s close on April 1, the last business day before Musk disclosed a significant stake in the company, sparking a share rally. Twitter shares were halted for the news.
Bret Taylor, Twitter’s Independent Board Chair, said at the time, “The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”
Parag Agrawal, Twitter’s CEO, said, “Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.”
The deal was unanimously approved by the company’s board but now seems less likely to be complete. Musk secured $25.5 billion of debt and margin loan financing and will provide about $21 billion in equity to fund the deal, according to the statement.
Previously Disney called off a deal to buy the platform saying it was “too problematic”, CEO Bob Iger revealed in a New York Times interview.
After calling it a “compelling” way to reach consumers, the deal never went through and Disney instead purchased a majority stake in sports streaming site BAMTech.
