Elon Musk has offered to acquire Twitter for the initial asking amount.
Twitter intends to accept the bid as long as a court approves it, marking the latest unexpected twist in Musk's months-long drive to purchase the social media network.
Elon Musk has reiterated his offer to buy Twitter at the previously agreed-upon amount. (Jim Watson/AFP/Getty Images)
According to a legal filing, Elon Musk has volunteered to proceed with a proposal to purchase Twitter at the price he suggested months ago before trying to call it off, a remarkable move weeks before the two sides were supposed to square off in a trial.
In a letter that Musk’s side delivered to Twitter overnight, he offered to go forward with the acquisition at $54.20 a share provided the Delaware Chancery Court, which was set to hear the trial on Oct. 17, agrees to “enter an emergency stay” of the case “and delay the trial and all other” connected procedures. In a financial filing on Tuesday, Twitter included a copy of the letter from Musk's counsel.
Twitter said Tuesday that it received the letter and plans to finalize the transaction at the initial share price provided by Musk's team. According to a source familiar with the conversations who spoke on the condition of anonymity to discuss sensitive subjects, the corporation intends to accept the offer but is waiting for confirmation that the judge can oversee the procedure.
Because there is so much distrust on both sides, Twitter executives are still debating if the letter is a legal tactic, according to the source.
Musk and his lawyers did not return calls seeking comment on Tuesday. However, the tech titan stepped in on Twitter on Tuesday afternoon.
"Buying Twitter is an accelerant to producing X, the everything app," he stated in a letter that was also utilized in his Twitter holding entity, "X Holdings."
Musk's offer comes at a critical juncture in the run-up to the trial, which was supposed to end months of legal bickering between the billionaire and the social media business following Musk's decision to cancel his planned $44 billion takeover of Twitter in July.
Both parties had been taking depositions. According to court schedules, Musk's side gathered testimony from Twitter CEO Parag Agrawal and whistleblower Peiter Zatko, the company's former head of security, who highlighted serious inadequacies in Twitter's security standards and inconsistencies in its submissions to security regulators.
According to two persons who were informed on Zatko's sworn interviews, they did not yield any insights that would have aided Musk's attempt to withdraw from the agreement without paying a substantial expense. Twitter also removed Zatko from office.
After the initial date was canceled, Musk was set to take the stand in the case on Thursday in Austin, where he resides. On Sunday in New York, his attorney Alex Spiro's deposition was scheduled to come next.
Buying Twitter is an accelerant to creating X, the everything app— Elon Musk (@elonmusk) October 4, 2022
According to legal experts, Musk's eagerness to conclude the transaction indicates that he understood he was in a worse position than he wanted to be heading into the trial and deposition.
In an email, Anat Alon-Beck, a commercial law professor at Case Western Reserve University, stated, "Musk is finally listening to his attorneys." "He'd be a fool not to attempt to acquire the company now to avoid being deposed."
The offer was initially reported by Bloomberg News. Following the revelation, Twitter shares were halted at their highest level in months on Tuesday.
"This is a clear hint that Musk realized going into Delaware Court that the prospects of winning vs the Twitter board were exceedingly improbable," Wedbush Securities analyst Dan Ives said in a report Tuesday. "This $44 billion transaction was going to happen one way or another."
The court convened an emergency hearing with both parties on Tuesday morning. Musk was eager to dismiss the complaint, but Twitter wanted guarantees that the process would be overseen by the court due to the skepticism, according to a source familiar with the conversations.
Musk has claimed for months that he should be able to back out of the acquisition because of claims Twitter made about spam and bots on the network, but legal experts say Musk waived due diligence by advancing with the deal.
Twitter has been thrown into turmoil this year due to a dramatic stock slide and an increasingly unclear future with Musk. Many top executives and lower-level employees have quit or been sacked.
Tesla's wealthy CEO invested heavily in Twitter earlier this year and made a hostile takeover offer in April. The corporation was first hesitant to accept his offer, but finally accepted it.
While Musk's interest in buying Twitter first appeared odd, one rationale for his acquisition became evident in text exchanges released in court records last week: he was growing unhappy with what he viewed as content moderation judgments encroaching on free expression. Musk stated in an April TED talk that he desired a "inclusive forum for free expression."
He also stated at an event in May that the ban on former President Donald Trump "was a morally poor choice, to be sure, and dumb in the extreme." After the insurgency on January 6, 2021, Twitter will permanently ban Trump.
The text exchanges also reveal that Musk's strongest backer in the process, Twitter co-founder and former CEO Jack Dorsey, was frequently at war with the board, which was often rushing to grasp Musk and his objectives.
The messages reveal an elite array of people, including celebrities, high-profile financiers, and media moguls, who provided Musk with feedback on the acquisition, offered hiring proposals, and occasionally persuaded him to reinstate right-wing personalities suspended by Twitter.
However, the outspoken executive, who has more than 107 million Twitter followers, attempted to withdraw from the arrangement months later, claiming that he had the right to do so since Twitter had not provided him with adequate information about the company's operations.
Since then, Twitter and Musk have been embroiled in a legal battle.
Musk became dissatisfied with the transaction due to economic pressures, since the impact of his offer caused a drop in Tesla's shares — his primary source of wealth — and his net worth. He had intended to finance the transaction with a combination of loans and a $33 billion equity pledge related to his own riches, which would be used to attract investors.
Musk sold roughly $7 billion in Tesla shares in anticipation of needing to seal the deal in early August, after the legal battle had already begun, surprise some investors.
"It is critical to prevent an emergency sale of Tesla shares in the (hopefully improbable) event that Twitter pushes this deal to close *and* some equity partners do not come through," he said on Twitter.
@elonmusk are you done selling?— Sawyer Merritt (@SawyerMerritt) August 10, 2022