To avoid trial, Elon Musk offers to buy Twitter at the original asking price
The Tesla CEO and his lawyers sent a letter to the social media giant, promising to respect the share price that was originally listed in April, according to a report by Bloomberg
Twitter’s stock price shot up by 13% to $48 a share after the news agency Bloomberg reported that Elon Musk is open to going ahead with the deal that he reneged on in June. Musk is reportedly offering to buy Twitter at $54.20 per share – $44 billion in total – which was the original offer he made earlier this year.
In addition to sending a letter to Twitter, he has also sent a copy to the Stock Exchange 98 mission, as required by law. It reads that Musk and his financial backers “intend to proceed to closing the transaction contemplated by the April 25, 2022 merger agreement.”
The letter also asks that there be an immediate stay on Twitter’s lawsuit to push the purchase through. A five-day trial is scheduled to begin in Delaware on October 17. Should Twitter accept the terms outlined in the agreement, Musk’s legal entanglement with the social media company would effectively end. Musk’s lawyers also sent the note to a Delaware court before dawn on Tuesday, October 4, just days before a scheduled preliminary hearing.
Twitter has been in the process of suing Musk, 51, since July, after he terminated his deal to purchase the company. The October 17 trial was set to be one of the biggest business confrontations of the century – it would have showcased an eccentric billionaire facing off against an extremely popular social media platform. Now, the status of the trial is up in the air.
Despite the fact that Musk is a hyperactive, controversial Twitter user, he has not tweeted anything in response to the report by Bloomberg. It is likely that the deal will go through – but it appears as if Musk is observing caution, as any judge would wisely be wary of his behavior in the coming days.
Twitter’s shareholders backed Musk’s takeover at a meeting convened on September 13. A supermajority of shareholders – 98.6% of them – voted in favor of the sale of Twitter, at the price that was set in April 2022. Tesla’s CEO – who owns 10% of Twitter’s shares – did not participate in the vote.
Musk backed out of the deal on July 8 of 2022, after complaining that Twitter had too many fake accounts. But one of the reasons why Musk claimed he wanted to buy Twitter in the first place was to clean it up – he was well-aware of the problems in the company before he made a bid in April. His reneging seems more in line with the depressed condition of the global economy.
Musk’s sudden request to go back to the original deal likely means that he doesn’t have much faith that he would win against Twitter in court. At the start of August, he even sold $7 billion of his Tesla shares, in preparation for a legal ruling that would either force him to buy Twitter or pay a massive fine.
Twitter has made a strong case against the Tesla CEO. Their lawsuit states: “Musk refuses to honor his obligations to Twitter and its stockholders, because the deal he signed no longer serves his personal interests. Having mounted a public spectacle to put Twitter in play – and having proposed and then signed a seller-friendly merger agreement – Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value and walk away.”
The judge overseeing the case – 42-year-old Kathaleen McCormick, Chancellor of the Delaware Court of Chancery – has a record of strongly enforcing contracts, unless there is a very obvious breach. This does not appear to be the case in this particular lawsuit. Legal experts have opined that Musk had a very slim chance of coming out ahead in court, which led him to throw in the towel and go ahead with the purchase of the social media giant. Of course, given his unstable character, there’s always time for a new surprise.
