Billionaire Elon Musk proposes to go ahead with his original $44 billion (£38 billion) bid to take Twitter private.
The U-turn took place this week and came in the form of a letter from Musk to Twitter that was revealed in a security file.
An agreement would put the world’s richest person in charge of one of the most influential media platforms and end months of lawsuits that damage Twitter’s brand and fuel Musk’s reputation for erratic behavior.
Tesla CEO Musk Takes Over a Company he originally promised to buy in Aprilbut soon soured.
Late last night, he tweeted that buying Twitter would accelerate his ambition to create an “everything app” called X.
The renewed offering comes ahead of a much-anticipated showdown between Musk and Twitter in a Delaware court on Oct. 17 — in which the social media company would seek an injunction ordering Musk to close the $44 billion deal.
Musk’s letter said he intended to go through with the deal on the original terms if the Delaware judge stayed the proceedings.
Why did he change his mind?
It was not immediately clear why Musk chose to abandon his fight, although some pointed to his planned impeachment.
“He was about to be impeached and a lot of inconvenient facts would come out,” Eric Talley, a professor at Columbia Law School, told Reuters.
Twitter received the letter from Musk and planned to close the deal at the original price, a spokesperson said. Twitter has not said whether it has accepted Musk’s offer.
Musk, one of Twitter’s most prominent users, said in July that he could walk away fine-free because the number of bot accounts far exceeded Twitter’s estimate of less than 5% of users. Bots are automated accounts and using them can lead to overestimation of the number of people on the service, which is important for ad rates and the overall value of the service.
Twitter’s legal team said on Sept. 27 that scientists employed by Musk estimated the number of fake accounts on the platform at 5.3% and 11%.
“As far as we can tell, none of these remote analyzes supported what Mr. Musk was telling Twitter and telling the world,” Twitter attorney Bradley Wilson told the court.
The original deal was “a very seller-friendly deal that would be very difficult to get out of,” said Adam Badawi, a law professor at UC Berkeley. Musk realized, he said, “it would most likely force him to close at $54.20 a share.”
During the day, Musk was relatively quiet on Twitter, but late Tuesday he tweeted that “Twitter X is likely to accelerate by 3 to 5 years.”
That matched suggestions he made to Twitter employees in June about creating a “super app” or marketplace for various apps and features like WeChat, which is popular in China. Musk has also said he wants to create a money transfer feature.
Show me the money
A settlement between the two parties would revive fears among Twitter users about Musk’s plans for the platform, which has removed prominent politically conservative voices. Donald Trump supporters hope Musk will reactivate the account of the former US president, who was banned by his supporters after the January 6, 2021 attack on the US Capitol.
Musk has used Twitter to stir controversy, including on Monday when he… launched a peace plan for the war between Ukraine and Russia that was swiftly condemned by Ukrainian President Volodymyr Zelenskiy.
Bloomberg was the first to report that Musk was willing to pay the original price. Musk also said his offer was conditional on halting the legal process.
A settlement at the original price would also allow Musk to fund the transaction without complications. If Musk and Twitter had renegotiated the price, committed backers technically could have walked away.
Musk has already sold $15.4 billion worth of Tesla stock since he agreed to buy Twitter.
Musk has also received funding commitments from banks — including Morgan Stanley, Bank of America Corp, Mitsubishi UFJ Financial Group Inc and Barclays Plc — to provide a $12.5 billion margin loan to support his Twitter acquisition.
The banks that agreed to fund the acquisition are likely to lose hundreds of millions of dollars on the deal as they would struggle to attract investors to buy the debt given the downturn in markets since the deal was signed.
However, the banks agreed to provide the financing regardless of whether they can sell the loans and get long legal opportunities to free themselves from the financing obligation, according to official records.
Since Twitter has already secured shareholder support for the sale to Musk, the deal could close quickly in the coming weeks if the two sides settle on the original terms.
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