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Documents showed that billionaire Elon Musk is proposing to go ahead with his original bid to acquire Twitter for $44 billion, calling for an end to a lawsuit brought by the social networking company that could force him to pay whether he wanted or not.
The agreement would put the world’s richest person at the helm of one of the most influential media platforms and end months of litigation that has damaged the Twitter brand and fueled what is known about Musk’s strange and unexpected actions and decisions.
Musk, CEO of electric car maker Tesla, will take over the company he had originally committed to buying in April, but quickly reversed his decision.
However, he wrote on Twitter late on Tuesday that the purchase of the social media giant would accelerate his ambition to create a “everything app” called X.
The new offer comes ahead of a highly anticipated showdown between Musk and Twitter in a Delaware court on October 17, in which the social media company is seeking an order for Musk to complete the deal for $44 billion.
Musk sent a message on Twitter on Monday saying he intends to proceed with the deal on the original terms if a Delaware judge blocks the proceedings. A source familiar with the Twitter team told Archyde.com that at a court hearing on Tuesday morning, the judge requested a report from both sides in the evening.
Why change the path?
It is not yet clear why Musk has chosen to abandon his fight, although some have attributed this to the approach of facing questions from the company’s lawyers.
“He was about to face questions (by Twitter’s lawyer) and he was going to come up with a lot of uncomfortable facts,” said Eric Talley, a professor at Columbia Law School.
A Twitter spokesperson told Archyde.com that the company had received Musk’s message and that he intended to complete the deal at the original price. Twitter did not say whether it would accept Musk’s offer.
Musk, one of Twitter’s most prominent users, said in July that he could withdraw from the deal without being penalized because the number of fake accounts is much higher than Twitter’s estimate of less than five percent of users. Using this type of calculation can lead to an overestimation of the number of people in the service, which is important for rates and the overall value of the service.
Twitter’s legal team said on September 27 that specialists hired by Musk estimated the number of fake accounts on the platform at between 5.3 and 11 percent.
Bradley Wilson, Twitter’s attorney, told the court: “None of these analyzes have so far corroborated what Mr. Musk has said to Twitter and told the world.”
Adam Badawi, a law professor at the University of California, Berkeley, said the original deal “is very much in the seller’s interest and it would be very difficult to get out of it.” He added that Musk “realised that it would most likely force him to finish it at $54.20 per share.”
Musk took to Twitter on Tuesday night to announce that the company “may be speeding up (creating an app) X by three to five years.”
He suggested to Twitter employees in June to create a “super app” or marketplace for different apps and features like WeChat, which are popular in China. Musk also said he wanted to create a money transfer feature.
Finance
The settlement between the two sides will revive concerns among Twitter users about Musk’s plans for the platform, which has banned prominent voices from the political conservative current. Donald Trump’s supporters hope that Musk will reactivate the account of the former US president, which was banned after his supporters attacked the Capitol building on January 6, 2021.
Musk used Twitter to stir up controversy over issues, most recently his presentation on Monday of a peace plan for the Ukraine-Russia war, which was quickly denounced by Ukrainian President Volodymyr Zelensky.
Bloomberg was the first to report on Musk’s willingness to pay the original price. Musk also said his offer was contingent on a halt to legal proceedings.
The settlement at the original price will allow MASIC to finance the deal without any complications.
Musk has already sold $15.4 billion in Tesla stock since agreeing to buy Twitter.
Musk also secured a financing commitment from banks including Morgan Stanley, Bank of America, Mitsubishi UFJ Financial Group and Barclays Plc for a $12.5 billion loan to support his Twitter acquisition.
Banks that agreed to fund the acquisition are likely to lose hundreds of millions of dollars in the deal as they will struggle to lure investors to buy debt, given the downturn in markets since the deal was signed.
However, the banks agreed to provide the financing regardless of whether they could sell the loans and face long legal prospects to free themselves from the obligation to finance, according to regulatory filings.
And since Twitter has already received shareholder support for its sale to Musk, the deal could close quickly in the coming weeks if the two sides settle on the original terms.