Update: As suspected, Elon Musk has bailed on his bid to buy Twitter, claiming the company committed multiple breaches of the merger agreement. Musk’s attorneys detailed their complaints in a regulatory filing with the SEC. “As further described below, Mr. Musk is terminating the Merger Agreement because Twitter 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 is likely to suffer a Company Material Adverse Effect,” reads the filing.
As noted below, Musk could be on the hook for a $1 billion breakup fee or more than that if Twitter beats him in court. In a tweet posted shortly after Musk’s announcement, Twitter Chairman of the Board Bret Taylor said the company would sue to force the deal to close.
The Twitter 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.
— Bret Taylor (@btaylor) July 8, 2022
If there’s a way out for the world’s richest man, it may be an expensive one.
Elon Musk is expected to take “drastic action” to get out of his $44 billion deal to buy Twitter, The Washington Post wrote yesterday in an article citing “three people familiar with the matter.”
The anonymous sources seem to be from Musk’s camp. “Musk’s team has concluded it cannot verify Twitter’s figures on spam accounts,” and the Musk side’s “doubts about the spam figures signal they believe they do not have enough information to evaluate Twitter’s prospects as a business,” the Post wrote. Musk’s people have also reportedly “stopped engaging in certain discussions around funding for the $44 billion deal, including with a party named as a likely backer.”
According to the Post, one of its sources said Musk’s team is now “expected to take potentially drastic action. The person said it was likely a change in direction from Musk’s team would come soon, though they did not say exactly what they thought that change would be.”
None of the comments are far off from what Musk has publicly said himself since he began trying to get out of the Twitter deal. Even though his offer to buy Twitter waived “business due diligence,” he later threatened to pull out of the contract and claimed Twitter violated the merger agreement by refusing to provide the data behind its spam estimates. Twitter then gave Musk access to its data “firehose.”