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Elon Musk has pulled back from his agreement to purchase Twitter at $54 per share, a $44 billion deal that he seemingly soured on after the ink dried. Musk, the current CEO of Tesla, sent Twitter’s stock plummeting 6% at the start of the week after he revealed Friday that he would not be going through with his decision to purchase the publicly-traded social media company.
This isn’t Musk’s first brush with very public confrontations with financial regulators. In 2018, after he tweeted that he planned to take Tesla private and said the funding was “secured,” he faced stiff penalties from the Securities and Exchange Commission and had to step down as the chairman of Tesla’s board of directors. It’s possible that he could face similar penalties for walking away from the Twitter deal.
Twitter’s board of directors has signaled that they plan to pursue Musk in court over his decision to end their deal. Some legal experts say that Twitter will have the upper hand in court because Musk added very few stipulations to his agreement to purchase the company for $44 billion.
Musk argues that he hasn’t been provided with enough data. But Twitter says they’ve handed over all the information he has requested in his bid to buy the company.
Even if Musk is allowed to leave the deal, he could pay a ten-figure penalty for backing out. While that might be chump change to the world’s wealthiest man, some of Musk’s critics say this is yet another example of him using his fortune to mobilize armies of lawyers just for a few laughs.
Musk initially said he planned to buy Twitter in order to clean the site up, reduce the number of bots, and alter the company’s stance on banning public figures. Musk described himself as a “free-speech absolutist,” arguing that Twitter is too large of a platform to ban prominent public figures.
However, after agreeing to buy Twitter at $54 per share, Musk saw the company’s stock price fall well under that level and reportedly wanted to renegotiate the agreement.
Rather than buy what he saw as an overvalued company, however, Musk has publicly claimed that his decision to back out of the purchase is related to Twitter’s supposed unwillingness to disclose how many active accounts on the site are actually bots. This seems to run counter to Musk’s earlier assertion that he would happily clean up Twitter’s bot problem.
In either case, Musk and Twitter will head to court for what is likely to be an expensive, protracted battle.
