Elon Musk’s rocky $US44 billion ($64 billion) offer to purchase Twitter is on the verge of failure, with the Tesla CEO informing Twitter’s board that he is cancelling the deal.
The deal’s potential unravelling is only the latest twist in a tale involving the world’s richest man and one of the most important social media sites.
Much of the drama has unfolded on Twitter, with Mr Elon — who has over 95 million followers — criticizing the company’s failure to live up to its ability as a free speech platform.
Shares of Twitter dropped 5% on Friday to US$36.81, well below the US$54.20 that Mr. Musk had proposed. Tesla’s stock, meanwhile, increased 2.5% to $US752.29 per share.
Mr.Elon 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, including providing Mr. Musk with enough data to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.”
Mr. Musk appeared to start toying with the idea of purchasing Twitter started in end of march.
During that time, according to Twitter, he contacted the firm’s board members, including co-founder Jack Dorsey, and informed them that he was purchasing company shares and was interested in either joining the board or taking Twitter private.
Twitter first offered Mr. Musk a place on its board. However, Twitter CEO Parag Agrawal stated six days later that Elon Musk will not be joining the board after all.
After that, his acquisition proposal for the business rapidly came together.
Musk agreed to purchase Twitter for US$54.20 per share, adding the number “420” to the price as a nod to the legalisation of marijuana.
He raised an additional $US7 billion from a variety of investors, including well-known figures from Silicon Valley like Oracle co-founder Larry Ellison, by selling shares in Tesla valued at around $US8.5 billion.
As a result of Mr. Musk’s public criticism of one of Twitter’s senior attorneys engaged in content-moderation decisions, Mr. Musk’s offer was received internally at Twitter with bewilderment and declining morale.
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.