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Twitter filed a lawsuit against Musk in Delaware Chancery Court to compel him to complete the purchase after...
Digital Desk: Elon Musk has revived a bid for Twitter Inc. at the initial price of $54.20 per share, reversing his decision to pull out of the deal and potentially averting a lengthy courtroom fight.
According to a filing with the Securities and Exchange Commission, Musk made the suggestion in a letter to Twitter on Monday. Without mentioning explicitly how it will react to Musk, San Francisco-based Twitter said it received the letter and intended to close the purchase at the agreed amount.
For Twitter, proceeding with Musk's plan augurs a future under a mercurial billionaire who has spent months publicly criticizing its management, questioning its value and changing his mind. It also means that his contested claims-that Twitter was lying about which percentage of users were bots, for instance-are not likely to be scrutinized in a court of law.
In premarket trade, Twitter shares slipped 0.6% in premarket trade after finishing 22% higher in New York on Tuesday at $52.
Musk had been attempting for months to cancel his April agreement to purchase Twitter. Shortly after the announcement of the acquisition, the billionaire started displaying symptoms of buyer's remorse and claimed that Twitter had misled him regarding the size of its user base and the prevalence of automated accounts known as bots.
Twitter filed a lawsuit against Musk in Delaware Chancery Court to compel him to complete the purchase after Musk formally terminated the agreement in July. The trial was supposed to start on October 17. The judge in Delaware on Tuesday asked both sides to come back to her with a proposal on how the case can now proceed. The options include having Twitter seek to dismiss the case or have her continue to retain jurisdiction until the deal closes, said a person familiar with the matter.
In the letter, Musk's attorneys wrote that he and his supporters "intend to proceed to close of the transaction contemplated by April 25, 2022, merger agreement, on the terms and subject to the conditions set forth therein." The plan also requires him to secure the required debt funding and a "quick stay of the proceedings" from the court. For banks, this is a challenging time to sell debt. Banks led by Morgan Stanley may be liable for hundreds of millions of dollars in losses on the unsecured portion alone given the multiyear high rates if they try to sell it to investors.
Musk later tweeted that "buying Twitter is an accelerant to creating X, the everything app." Musk has stated that he wants Twitter to be more like WeChat and TikTok, with a large number of users who are very active.
Both sides' attorneys have shot cannons of subpoenas at one another in the lead-up to the anticipated Delaware proceedings in an effort to get testimony and evidence. Musk's team had to provide evidence that Twitter broke the agreement's provisions. Twitter claimed that Musk utilized the bots problem as an excuse to break out of a deal that he no longer considered to be profitable.
As per reports, Musk's legal team sensed that the case was not going well as Judge Kathaleen St. J. McCormick frequently sided with Twitter in pretrial rulings. There were worries Musk's side wouldn't be able to demonstrate a material detrimental effect, the legal requirement to terminate the contract, even with the late appearance of a Twitter whistle-blower who said executives weren't forthright on security and bot issues.
The news broke on Tuesday when many employees were in the middle of 2023 planning presentations on Twitter, according to numerous sources. Presenters were unaware of the news, which staff members observed spreading on their personal social networks. Since the contract was completed, Musk has been openly mocked and criticized on internal Slack channels, and many workers have expressed opposition to the idea of working for him.
In an internal memo Tuesday to Twitter staff, viewed by Bloomberg News, General Counsel Sean Edgett thanked workers for their patience as the company works through the legal issues. "I will continue to keep you posted on significant updates," he wrote. Trading of Twitter shares was halted after the news broke and didn't resume until after the company confirmed receipt of Musk's letter.
Shareholders of Twitter decided on September 13 to accept Musk's buyout proposal. At the time, the company reported that the purchase had received support from 98.6% of voters. According to two people acquainted with his decision, Musk, Twitter's largest shareholder, cast no votes at all. When he decided to buy Twitter, Musk held more than 73 million shares or close to 10% of the firm.
According to a court document filed on Tuesday, Musk was set to respond to inquiries regarding the sale in Austin, Texas, on October 6-7. Twitter Chief Executive Officer Parag Agrawal was scheduled to sit down for his deposition on Monday.
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