Northwest Arkansas Democrat-Gazette
Musk again offers Twitter buyout
Tesla CEO proposes keeping his purchase price at $44B
The saga of Elon Musk’s on-again, off-again purchase of Twitter Inc. took a turn toward resolution Tuesday after the Tesla CEO proposed buying the company at the previously agreed price of $44 billion — the news halting trading in shares of the social platform for much of the day.
Musk made the proposal in a letter to Twitter that the company disclosed in a filing Tuesday with the U.S. Securities and Exchange Commission.
It came less than two weeks before a trial between the two parties is scheduled to start in Delaware.
The letter from Musk’s lawyer, dated Monday, said Musk would close the merger signed in April, provided that the Delaware Chancery Court “enter an immediate stay” of Twitter’s lawsuit against him and adjourn the trial scheduled to start Oct. 17.
In a statement, Twitter leadership said the company intends to close the transaction at $54.20 per share — the original $44 billion price tag — after receiving the letter from Musk. It remains unclear what action from from the company is needed formally to approve the proposal.
Trading in Twitter stock resumed late Tuesday, soaring 22% to close at $52 on the day.
Musk had declared in July that he no longer intended to complete the acquisition because he believed Twitter’s platform was overrun by spam and that Twitter had misled him regarding the number of “bots,” or fake accounts, operating there.
Twitter then sued Musk to force the acquisition, arguing in legal filings that Musk’s reasons for abandoning the deal were smoke screens and suggesting that he had simply hoped for a lower price after stock market declines had decreased his overall wealth.
Atop the bot concerns, Musk also cited recent whistleblower claims from a former Twitter security executive who said the company also had misled federal regulators about the company’s security practices.
A deal could allow both sides to avoid a messy public
trial, which most likely would have featured testimony from Musk and senior Twitter executives. As of Tuesday, Musk was still scheduled to be deposed Thursday and Friday in Austin, Texas, according to a legal filing.
Eric Talley, a law professor at Columbia University, said he’s not surprised by Musk’s turnaround, especially ahead of the scheduled deposition that was “not going to be pleasant.”
“On the legal merits, his case didn’t look that strong,” Talley said. “It kind of seemed like a pretty simple buyer’s remorse case.”
If Musk were to lose the trial, the judge could not only force him to close the deal, but also impose interest payments that would have increased its cost, Talley said.
What did surprise Talley is that Musk doesn’t appear to be trying to renegotiate the deal. Even a modest price reduction might have given Musk a “moral victory” and the ability to say he got something out of the protracted dispute, he said.
Talley said he would insist on Musk putting money into an escrow account until the deal is completed. Such an account could hold cash and/ or Twitter shares, as a goodfaith demonstration by Musk, Talley suggested.
Neither Twitter nor attorneys for Musk responded to requests for comment Tuesday. And neither Musk nor Twitter CEO Parag Agrawal have written anything about the deal on Twitter, where many developments in the dispute have been aired.
Many of Musk’s tweets in the past 24 hours instead have been about a divisive proposal to end Russia’s invasion of Ukraine, drawing the ire of Ukrainian President Volodymyr Zelenskyy.
If the deal does go through, Musk will likely be stuck with a company he damaged with repeated statements denouncing fake accounts, Susannah Streeter, senior markets analyst for Hargreaves Lansdown in the United Kingdom, wrote in an investor note.
“This is an important metric considered to be key for future revenue streams via paid advertising or for subscriptions on the site, and his relentless scrutiny of Twitter’s figures over the last few months is likely to prompt questions from potential advertising partners,” she wrote.