Following his decision to purchase Twitter in April, Elon Musk's decision to back out of the agreement represents the most recent development in a protracted saga. What follows as the dispute is heard in court?


Elon Musk, the owner of Tesla and the richest man in the world, is attempting to back out of his $44 billion offer to purchase Twitter.

Musk stated his desire to end the arrangement in a complaint with the US Securities and Exchange Commission (SEC), citing Twitter's "material breach" of their contract and "false and misleading" claims made during discussions.

Following his decision to purchase Twitter in April, Musk's decision to back out of the agreement represents the most recent development in a protracted saga.

In the meantime, the social media corporation has declared that it intends to take legal action to enforce the agreement.

Why Musk is withdrawing from the agreement


Musk has argued that Twitter has not given him the information he needs regarding the prevalence of phoney or spam accounts on its network, an issue he initially brought up in May. Until he received the information from Twitter, which claimed that spam and bot accounts made up fewer than 5% of its total users, he had declared that the agreement was "temporarily on hold."


Musk's legal team stated in a filing with the US SEC that "Mr. Musk has requested the data and information necessary to'make an independent assessment of the incidence of false or spam accounts on Twitter's network for almost two months...


Twitter has been unable or unwilling to offer this knowledge. Twitter has occasionally ignored Mr. Musk's demands, rejected them for apparent illogical reasons, and pretended to comply while providing Mr. Musk with insufficient or useless information.

In addition, Musk claimed that Twitter had violated its responsibility to "preserve substantially intact the material components of its current business organisation" by firing top executives and a third of its talent acquisition staff.

Although these are essentially the two main reasons that Musk has given the SEC for ending the contract, other variables may possibly have had an impact. First off, since the acquisition was disclosed, tech equities everywhere have experienced a significant slump. The value of Twitter's stock on the New York Stock Exchange fell by roughly 29% on Friday, closing at $36.81 as opposed to $51.70 on April 25, when the firm had accepted Musk's offer. Since the announcement of the acquisition, Tesla's stock price has decreased by more than 24%.

Second, it was unclear how Musk would pay for the $44 billion transaction. Musk had previously committed $27.25 billion in equity; in May, he had informed the US SEC that the deal would now comprise $33.5 billion. Additionally, he had raised nearly $7 billion from investors, including Prince al-Waleed bin Talal of Saudi Arabia, by selling Tesla stock valued at approximately $8.5 billion. He had nonetheless disclosed to the SEC that he was still looking for further funding and was in discussions with Twitter shareholders, including former CEO Jack Dorsey, about perhaps keeping their holdings in the business. It's uncertain if Musk was able to secure enough funding for the transaction.

What happens next?

Given that Twitter has made it apparent that it would take legal action to enforce the terms of the agreement, Musk and the social media platform may be in for a protracted court struggle.

The Twitter Board is dedicated to completing the deal at the price and conditions negotiated with Mr. Musk, and it intends to take legal action to enforce the merger agreement. According to Twitter's chairman Bret Taylor, we are optimistic that we will win in the Delaware Court of Chancery. A $1 billion break-up fee is also included in the original merger deal.

According to Reuters, rather than a judge ordering a transaction to be completed, contentious mergers and acquisitions that are brought before Delaware courts typically result in the parties renegotiating agreements or the acquirer paying the target a settlement to withdraw.

The many twists and turns in the Musk-Twitter deal

Musk began purchasing Twitter shares in January 2022; his ownership in the firm later increased to nearly 5% in March and 9.2% in April, giving him the company's largest individual shareholder.


Musk joined the Twitter board on April 4, according to CEO Parag Agrawal, but just four days later, on April 9, Musk informed the social media business that he would not accept a board membership and would instead make a bid to take the company private.

Twitter's board adopted a "poison pill" policy to resist any efforts of a hostile takeover of the firm after Musk's offer to buy it for $44 billion on April 14. The firm approved Musk's initial $44 billion offer to buy Twitter and take it private on April 25 after he revealed the specifics of his financial plan and mentioned that he had obtained commitments to raise $46.5 billion.


In the following weeks, Musk sold Tesla stock valued at about $8.5 billion and raised $7.1 billion from investors like Prince Al-Waleed bin Talal, Sequoia, Binance, a16z, and others to fund the transaction.

Soon after, Agrawal disclosed that Bruce Falck and Kayvon Beykpour, two of Twitter's top executives, would be leaving the organisation. A hiring freeze and other cost-cutting initiatives were also announced by him.


Musk announced that the Twitter acquisition was "temporarily on hold" on May 14 after raising concerns about the platform's bogus and spam accounts.


Musk argued that the purchase "cannot move forward" without proof of bogus accounts, despite Agrawal's statement that less than 5% of its users are spam or phoney accounts.