Billionaire Elon Musk has reversed course and is now looking to proceed with his original $44-billion bid to take Twitter private.
But his offer depends on the social media company dropping its legal proceedings.
The world’s richest man has called for an end to a lawsuit by Twitter that could have forced him to pay up, security filings showed on Tuesday.
An agreement would put Musk in charge of one of the most influential media platforms and end months of litigation that damaged Twitter’s brand and fed Musk’s reputation for erratic behaviour.
The chief executive of electric car maker Tesla is expected to take over a company he originally committed to buying in April, but later soured on the deal.
Late on Tuesday he tweeted that buying Twitter would speed up his ambition to create an “everything app” called X.
The renewed offer comes ahead of a highly anticipated face-off between Musk and Twitter in Delaware’s Court of Chancery on October 17, in which the social media company was set to seek an order directing Musk to close the deal for $44 billion.
Musk sent Twitter a letter on Monday that said he intended to proceed with the deal on the original terms if the Delaware judge stayed the proceedings.
A source familiar with Twitter’s team said that at a court hearing on Tuesday morning the judge requested the two sides report back in the evening.
It was not immediately clear why Musk chose to abandon his fight, although some pointed to his scheduled deposition.
‘Uncomfortable About Court Hearing’
“He was about to get deposed and a lot of uncomfortable facts were going to come out,” Eric Talley, a professor at Columbia Law School, said.
Twitter received Musk’s letter and intended to close the deal at the original price, a spokesperson said. Twitter did not say whether it accepted Musk’s offer.
Musk, one of Twitter’s most prominent users, said in July he could walk away without penalty because the number of bot accounts was much higher than Twitter’s estimate of less than 5% of users. Bots are automated accounts, and their use can lead to overestimations of how many humans are on the service, which is important for advertising rates and the overall value of the service.
Twitter’s legal team said on September 27 said that scientists employed by Musk estimated the number of fake accounts on the platform at 5.3% and 11%.
“None of these analyses so far as we can tell remotely supported what Mr. Musk told Twitter and told the world,” Twitter lawyer Bradley Wilson told the court.
The original deal was “a very seller-friendly agreement that would be very difficult to get out of,” Adam Badawi, a law professor at UC Berkeley said. Musk realized, he said, “in all likelihood it was going to result in forcing him to close at $54.20 a share.”
Musk was relatively quiet on Twitter during the day, but late on Tuesday he tweeted that “Twitter probably accelerates X by 3 to 5 years”.
That echoed suggestions he made to Twitter staff in June about creating a “super app” or marketplace for different apps and features like WeChat, which is popular in China. Musk also has said he wants to create a money transfer feature.
Concern About His Plans
A settlement between the two sides would revive fears among Twitter’s users about Musk’s plans for the platform, which has removed prominent politically conservative voices. Supporters of Donald Trump hope that Musk will reactivate the account of the former US president, who was banned after the January 6, 2021, attack on the US Capitol by his supporters.
Musk has used Twitter to stir controversy, including on Monday when he floated a peace plan for the Ukraine-Russia war that drew swift condemnation from Ukraine’s president, Volodymyr Zelenskiy.
A settlement at the original price would also allow Musk to finance the transaction without any complications. If Musk and Twitter had renegotiated the price, it would have technically allowed committed backers to walk away.
Musk has already sold $15.4 billion worth of Tesla shares since agreeing to buy Twitter.
Musk has also secured a financing commitment from banks – including Morgan Stanley, Bank of America Corp, Mitsubishi UFJ Financial Group and Barclays – to provide a $12.5 billion margin loan to support his Twitter acquisition.
The banks that agreed to finance the acquisition are likely to lose hundreds of millions of dollars on the deal because they would struggle to attract investors to buy the debt, given the downturn in markets since the deal was signed.
However, the banks agreed to provide the financing irrespective of whether they can sell the loans and face long legal odds freeing themselves from the financing commitment, according to regulatory filings.
Since Twitter has already received shareholder support for the sale to Musk, the deal could close quickly in the coming weeks if the two sides were to settle on the original terms.
- Reuters with additional editing by Jim Pollard