Elon Musk Backs Out Of Twitter Deal

SAN FRANCISCO, CA — Elon Musk's bombshell $44 billion bid on Twitter unraveled on Friday when the Tesla CEO announced he was terminating his acquisition.

Twitter could accept a $1 billion breakup fee or they could pivot to take the tech mogul to court. The San Francisco-based company has not publicly commented on the termination.

On his quest to take control of the company, Musk, the richest man in the world, has accused Twitter of failing to be a platform that guarantees free speech.

Musk has more than 95 million followers on the social media platform.

Last month, Twitter's board recommended that its shareholders approve the $44 billion sale to Musk. The recommendation came in a regulatory filing, in which the company said its board of directors unanimously determined the merger agreement "is advisable and the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Twitter and its stockholders."

On Friday, shares of Twitter fell 5 percent to $36.81, well below the $54.20 that Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5 percent to $752.29.

Musk previously threatened to throw the deal out over doubts about the number of existing spam and fake Twitter accounts. He had said three hurdles remain before he could buy the platform. He wanted Twitter to clarify how many users are real.

In a letter to the Securities and Exchange Commission, Musk said Twitter has “not complied with its contractual obligations” surrounding the deal, namely giving Musk enough information to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.”

Musk's interest in buying Twitter appeared to arise in late March, when Twitter said he contacted members of its board and told them he was buying up shares of the company and interested in either joining the board, taking Twitter private or starting a competitor.

Then, on April 4, he revealed in a regulatory filing that he had became the company’s largest shareholder after acquiring a 9% stake worth about $3 billion.

At first, Twitter offered Musk a seat on its board. But six days later, Twitter CEO Parag Agrawal tweeted that Musk will not be joining the board after all. His bid to buy the company came together quickly after that.

Musk had agreed to buy Twitter for $54.20 per share, inserting a “420” marijuana reference into his offer price. He sold roughly $8.5 billion worth of shares in Tesla to help fund the purchase, then strengthened his commitments of more than $7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.

Inside Twitter, Musk’s offer was met with confusion and falling morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content-moderation decisions.

As Twitter executives prepared for the deal to move forward, the company instituted a hiring freeze, halted discretionary spending and fired two top managers. The San Francisco company has also been laying off staff, most recently part of its talent acquisition team.

READ MORE: Twitter Board Recommends $44 Billion Sale To Billionaire Elon Musk

The Associated Press contributed to this report.