In an unexpected about-face, billionaire Elon Musk has agreed to purchase Twitter as originally agreed upon in April 2022, reports Deadline. The deal will proceed as planned, provided that debt financing is secured and the judge in the Twitter vs. Elon Musk case agrees to stay the five-day trial scheduled to begin in a Delaware Chancery Court on October 17. The change of heart comes days before Musk’s scheduled deposition on Thursday and Friday this week.
Musk’s legal team filed a letter with the SEC yesterday, stating they plan to proceed with the original agreement.
“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,” said Musk’s attorneys in the letter to the SEC.
In a statement, Twitter 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.”
Twitter shareholders approved the original deal at a special meeting in September.
Judge requested a plan
After the letter was sent to the SEC, Delaware Chancery Court Judge Kathaleen McCormick requested that Musk and Twitter get back to her by the end of the day yesterday with a plan to complete the merger, reports The Wall Street Journal. Media outlets and legal experts are speculating that Musk anticipated losing the trial and being forced to buy Twitter. Agreeing to complete the deal helped Musk avoid costly legal fees, a highly-publicized trial, and a potential loss at the trial.
At 3:39 p.m. yesterday, Musk took to Twitter to explain that the purchase of Twitter could expedite his development of X.com, a social media platform Musk has talked about building if the Twitter deal did not go through.
News of the completion of the deal has sent Twitter stock soaring. At 7:59 p.m. EDT, stock closed at $52.00 per share in after-hours trading. This is the stock’s highest value since the beginning of the year, though still below the 52-week high of $68.41 per share and well above the 52-week low of $31.30 per share.
What’s next?
If Musk and Twitter agree to the original terms, Musk’s financing comes through, and the Judge McCormick agrees to the stay the trial, the last six months of wheeling, dealing, and wrangling may have been a waste of time. They have certainly wasted a lot of effort and money as the two sides played “he said, they said,” accusing the other party of sabotaging what could have been a productive partnership.
Once the papers are signed and money changes hands, it will be up to Musk to decide what’s next. He has previously stated he would take the company private, and he has hinted at things he’d like to change about Twitter. Among his ideas are a new approach to content moderation, diversifying revenue to become less reliant on advertising, minimizing or stopping spam and scam bots, and making the algorithm open source. At this point, all those ideas are speculation.
Insider Take
This is an unexpected change of heart on the part of Musk and seemingly inconsistent with his character. Though a genius, some of Musk’s decision making is impulsive, but he is also stubborn and not willing to back down from a fight. He originally waived his due diligence rights to the deal, and then accused Twitter of not providing adequate information so he could make an informed purchase decision. Backing down before his deposition and the trial seem to indicate that Musk was concerned he would lose the trial. At this point, it seems the deal is likely to be completed in the near future. What happens to Twitter after that is anyone’s guess.
