Elon Musk Moves to Terminate His $44 Billion Twitter Deal (UPDATE)

The Tesla CEO confirmed his decision in a letter sent to Twitter, claiming the company was "in material breach of multiple provisions of" their agreement.

Elon Musk gestures as he speaks during a press conference at SpaceX's Starbase facility

Elon Musk gestures as he speaks during a press conference at SpaceX's Starbase facility near Boca Chica Village in South Texas on February 10, 2022. - Billionaire entrepreneur Elon Musk delivered an eagerly-awaited update on SpaceX's Starship, a prototype rocket the company is developing for crewed interplanetary exploration. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)

Elon Musk gestures as he speaks during a press conference at SpaceX's Starbase facility

UPDATED 7/19, 4:25 p.m. ET: Twitter has earned a significant legal victory in its lawsuit against Elon Musk as he attempts to back out of his acquisition of the platform. 

CNN Business reports a judge in Delaware has agreed to move forward with a five-day trial in October after Twitter filed a motion to expedite proceedings by requesting a four-day trial in September. William Savitt, lead counsel for the social media giant, argues Musk “inflicts harm on Twitter everyday, every hour and every day” through his own account. 

“Musk has been and remains contractually obligated to use his best efforts to close this deal,” Savitt said. “What he’s doing is the exact opposite; it’s sabotage.”

Musk’s attorney Andrew Rossman countered that his client remains one of Twitter’s largest shareholders, and “doesn’t have an incentive to keep this hanging for a long time.” Rossman said the Tesla and SpaceX CEO would prefer the trial begin early next year. 

UPDATED 7/12, 5:25 p.m. ET: Twitter is suing Elon Musk after the Tesla CEO moved to terminate his deal to purchase the company for $44 billion, CNBC reports. The company is requesting that Musk complete the acquisition of the social media platform. 

“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the complaint, which was filed in in the Delaware Court of Chancery, reads. “This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business.”

See original story below. 

Elon Musk is attempting to back out of his controversial Twitter acquisition. 

The Tesla CEO announced his decision Friday in a letter filed with the U.S. Securities & Exchange Commission. Musk claims he’s terminating the $44 billion agreement because the platform made “false and misleading” statements during the negotiation process, and failed to meet its contractual obligations.

“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,” the letter reads.

It was written by Musk’s attorney Mike Ringler. 

Back in April, Musk agreed to purchase Twitter at $54.20 a share ($43 billion); however, he later threatened to squash the deal if Twitter didn’t provide additional data on “spam bots,” which would allow he and his team to make an independent assessment on the prevalence of fake accounts on the platform.

“Twitter has failed or refused to provide this information,” the statement read. “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”

The letter also states Twitter breached the agreement by terminating its general manager of consumers and its revenue product lead, as well as announcing its plans to fire a third of its talent acquisition team. Ringer argues the company failed to comply with its agreement “to seek and obtain consent before deviating from its obligation to conduct its business in the ordinary course.”

According to theAssociated Press, the acquisition included a $1 billion breakup fee that would be paid by whichever party decided to walk away. However, experts believe Twitter may decide to take the issue to court in an attempt to save the deal or secure a larger payout.

“Merger agreements are drafted to avoid exactly what Musk is doing, which is try to find some tiny little false thing and then say, ‘Whoops, I get to walk away now,” Ann Lipton, a business law professor at Tulane University Law School, told NPR.

“They specifically say things like, you can’t back out unless it’s not just false, but incredibly false, hugely false, massively damaging to the company … [Twitter] would much rather have the $54.20 without a court fight, but it’s worth fighting over … There is a lot that they could sacrifice that would still make it worth it in the end if they got to force Musk to close.”

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