According to Tuesday’s securities filing, Elon Musk sent Monday a message to Twitter proposing to continue with his agreement to buy the company for the original price of $54.20 per share.
Musk stated in the letter that he would continue with the acquisition under the original terms, subject to receipt of the debt financing. The Delaware Chancery Court was asked to stop the litigation proceedings regarding Musk’s initial attempt at pulling out of the deal and to adjourn the upcoming case over the dispute.
A Twitter spokesperson stated that Musk had sent the company a letter. The spokesperson also reiterated the previous statement that the Company intended to close the transaction at $54.20 per share.
Musk tweeted Tuesday night: “Buying Twitter is an accelerant for creating X, The Everything App.”
Bloomberg reported the news of the letter earlier Tuesday. The stock of Twitter (TWTR), was stopped twice. The second stop was for news pending. The stock traded more than 20% higher, surpassing $51 per share, and close to the agreed-upon deal price after it resumed trading.
This news comes as both sides are preparing for trial in two weeks. It is about Musk’s attempt at terminating the $44 billion acquisition deal, which Twitter had sued him for. Musk’s lawyers were scheduled to depose Parag Agrawal, the CEO of Twitter, on Monday. Twitter’s lawyers planned to begin deposing Musk on Thursday.
This follows Friday’s release of a cache of Musk’s text messages regarding the deal. These messages gave a glimpse at the list of Silicon Valley billionaires and insiders — including Larry Ellison and members of the Murdoch clan — who reached out to him to offer their opinions and financing.
This agreement could end months of conflict between Musk and Twitter, which has created huge uncertainty for users, investors, and employees of one of the most important social media platforms in the world.
Twitter will now have to decide how to respond. According to Josh White (an assistant professor at Vanderbilt University in finance), Twitter’s board is likely to agree to close the deal.
White stated that the very public scandal has taken a toll on Twitter employees and them. All parties should complete the deal quickly and seamlessly. It will likely close quickly, I believe.”
According to Eric Talley, a Columbia Law School professor, Twitter may not want the litigation to pause until the deal is closed. If Musk’s offer fails to materialize, the company might want to continue with the litigation process while it negotiates with Musk.
“Twitter will probably say, “Look, we want you to engage us on this… But we still have a trial on October 17 and until that is signed, sealed, and delivered, then we need to get ready to trial,” Talley stated.
In April, Musk announced that he was Twitter’s largest shareholder. Musk refused to accept a bid to be on Twitter’s board. He then threatened a hostile takeover. After Musk signed an agreement to purchase the company, he raised concerns about bots and attempted to end the agreement. Twitter sued him to enforce the deal. A whistleblower added to his argument.
Musk originally sought to end the agreement citing claims that the company had misrepresented the number of spammers and bot accounts on the platform. Twitter claimed that Musk had broken the agreement and was using bots to terminate the deal. This was after a wider market decline which also affected Tesla stock and, in turn, Musk’s wealth.
Twitter maintained throughout the exchange that it would follow through on the deal at the original price and terms.
Many legal experts believe that Twitter has the stronger case heading into court. Musk would have to prove that it made materially misleading statements in securities filings and the deal contract.
After the approval vote of Twitter shareholders last month, the lawsuit was the last hurdle in the way of the deal closing. The original plan was for the deal to close in March.
The news of the possible closing of the deal may cause attention to shift once more towards what Musk’s control over the social media platform could mean.
Musk previously suggested that several possible changes could be made to Twitter. The most important of these would include the return of former President Donald Trump to Twitter and the elimination of permanent account bans. Musk also stated that he would like Twitter to be more open to free speech and to change its content moderation policies.
Employees at Twitter have raised concerns about the potential impact of a Musk acquisition on benefits like remote work and parental leave.
In a Tuesday message to employees, Sean Edgett, Twitter’s General Counsel, stated that they had received Musk’s letter and would close the deal at $54.20 per share. According to a copy of the message, he said that he would keep you updated on any significant developments, but in the meantime, he thanked employees for their patience while they work through the legal side.
On Tuesday, Blind, a private anonymous forum that is popular among Twitter employees was buzzing amid reports of Musk’s reversal. According to screenshots taken by a Twitter employee, an overwhelmingly negative reaction was seen on the forum.
One comment said, “Cue the layoffs.” Many other employees expressed concern that Musk might reduce Twitter’s benefits package and end the severance offer to employees who leave.