Why Elon Musk Cancelled $44bn Deal To Buy Twitter

Elon Musk has notified Twitter that he is terminating the proposed $44 billion deal to buy the microblogging platform.

Why this decision: Musk has claimed that Twitter had failed to provide adequate information about fake and spam accounts.

• Twitter had provided some information but it had some strings attached, use limitations or other artificial formatting features, which rendered some of the information minimally useful.

• While acknowledging that Twitter provided access to the eight developer “APIs” after initial resistance, the filing from Musk claimed that APIs contained a rate limit lower than what Twitter provides to its largest enterprise customers.

• The information was not enough to perform analysis which is fundamental to the company's business performance.

• The filing said that Twitter is in material breach of multiple provisions of Agreement, appears to have made false and misleading representations upon which Musk relied when entering into the Merger Agreement.

How Twitter responded: A legal battle may follow as Twitter's chairman, Bret Taylor, vowed to pursue legal action to the enforce the merger agreement.

• "The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Musk...," he wrote.

• The terms of the deal require Musk to pay a $1 billion break-up fee if he does not complete the transaction.

The ups and downs: Musk first offered to buy Twitter, the board adopted a "poison pill" plan in an attempt to block the deal.

• Twitter subsequently reversed course and relented to a $44 billion buyout, which Musk termed as his "best and final" offer.

• Musk even stitched together a funding arrangement. The buyout was proposed to be funded by $21 billion in cash, $12.5 billion of margin loans secured against Musk's 16 per cent stake in Tesla, together with $13 billion in loans from a consortium of banks.

• The funding arrangement was recalibrated with Musk reducing the size of the loan against his Tesla shares from $13 billion to $6.25 billion. It was done to address the pressure on the Tesla share price over concerns that Musk might sell Tesla stock as part of the financing deal.

• Even as financing for deal was being secured, Musk suddenly indicated that he is keeping the deal in abeyance until the social media company proved that fake and spam bots account for less than 5 per cent of its user base.