UPDATED with confirmation of Musk offer, Twitter response: It’s official. Elon Musk has backed down, offering to buy Twitter at the price he agreed upon back in April pending financing and a judge agreeing to stay the trial scheduled to start later this month in Delaware Chancery Court.
Twitter, in a carefully worded statement, said, “We received the letter from the Musk parties which they have filed with the SEC. The intention of the Company is to close the transaction at $54.20 per share.” It didn’t provide any other details. That’s what Twitter has been saying ever since Musk walked away from the agreement.
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In a letter filed with the SEC this afternoon, Musk’s Skadden Arps attorneys said: “Gentlemen… we write to notify you that the Musk Parties intend to proceed to closing of the transaction contemplated by the April 25, 2022 Merger Agreement, on the terms and subject to the conditions set forth therein and pending receipt of the proceeds of the debt financing contemplated thereby, provided that the Delaware Chancery Court enter an immediate stay of the action, Twitter vs. Musk, et al. (C.A. No. 202-0613-KSJM) (the “Action”) and adjourn the trial and all other proceedings related thereto pending such closing or further order of the Court.”
“The Musk Parties provide this notice without admission of liability and without waiver of or prejudice to any of their rights, including their right to assert the defenses and counterclaims pending in the Action, including in the event the Action is not stayed, Twitter fails or refuses to comply with its obligations under the April 25, 2022 Merger Agreement or if the transaction contemplated thereby otherwise fails to close.”
Twitter shares, which soared and had been halted from trading since noon today, resumed their trajectory, ending the session up more than 22% at $52.02.
PREVIOUSLY: Shares of Twitter are up 13% Tuesday as investors took heart that Elon Musk will move ahead with his tortured acquisition of the social media platform. The billionaire Tesla founder has proposed going forward with the deal for its original pricetag of $54.20 a share, or $44 billion, according to news reports.
The surging stock, up nearly 18% at its high so far today, was halted from trading several times.
Musk agreed to buy Twitter in April but backed out. Twitter sued and the two sides were set to face off in Delaware Chancery Court later this month.
“This is a clear sign that Musk recognized heading into Delaware Court that the chances of winning vs. Twitter board was highly unlikely and this $44 billion deal was going to be completed one way or another,” said Daniel Ives. Being forced to do the deal after a long and ugly court battle in Delaware was not an ideal scenario and instead accepting this path and moving forward with the deal will save a massive legal headache.”
Musk owns 9.6% of Twitter. He accumulated the stake early this year and initially asked for, and got, a board seat before deciding instead to buy the company outright. His offer waived due diligence. He threatened a hostile takeover if the company’s initially reluctant board didn’t agree. The price was good, and it did. Musk inked the $44 billion deal in April but unilaterally terminated it in July as markets sank, backing up the move in part by questioning Twitter’s reporting on bot, or spam accounts, as fuzzy. Twitter has always said that spam bots represent less than 5% of its total user base. Musk has insisted it’s higher. Twitter claimed Musk was simply having buyers remorse and sued. Depositions have been flying and the case was scheduled in Wilmington court for Oct. 17.
Musk’s case looked soft initially but he seemed to get a boost after news that Twitter’s former head of security Peiter Zatko had filed a whistleblower complaint against the company, followed by Zatko’s testimony on Capitol Hill last month. He spent a morning describing to senators what he called dangerously lax cybersecurity as the company focuses on revenue and user growth (the same day Twitter shareholders formally voted to approve to the merger). The Chancery Court judge agreed over Twitter’s objections to let the Musk camp amend its countersuit to reflect the whistleblower claims.
However, more recently Twitter’s hand and defense of its bot account numbers gained traction and the stock got a small bump last Friday on speculation that Musk would agree to go forward with the deal, at a discount.
Musk was scheduled to be deposed on Thursday and Friday.
A Twitter spokesperson wasn’t immediately available to comment and it wasn’t immediately clear if Twitter planned to accept Musk’s offer.