Elon Musk Proposes to Buy Twitter for Original Price of $54.20 a Share
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Tesla CEO Elon Musk revived his bid for Twitter Inc. at the original offer price of $54.20 a share, potentially avoiding a courtroom fight over one of the most contentious acquisitions in recent history.
Musk made the proposal in a letter to Twitter, according to people familiar with the matter, who asked not to be identified discussing confidential information. Shares in Twitter climbed as much as 18% on the news, and trading has since been halted. Musk and representatives for San Francisco-based Twitter didn’t respond to requests for comment on the letter or whether the company would accept the proposal.
Musk’s proposal to match the original deal terms means Twitter is facing a future under the leadership of 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 courtroom.
Tesla Shares Tumble
Tesla Inc. tumbled after news that CEO Elon Musk proposed to buy Twitter Inc. at the original offer price, raising the possibility that he will sell more of the electric carmaker’s stock.
Musk unloaded billions of dollars in Tesla shares over the summer to accumulate the cash needed to fund his portion of the deal. It wasn’t immediately clear if Musk will need to sell additional Tesla shares to finance the deal.
Tesla’s shares pared gains of as much as 6.2%, briefly turning negative before rebounding slightly.
If Musk succeeds in buying the social media giant, it raises the prospect that Tesla’s leader would be spread even more thinly as the automaker attempts to ramp production globally and fend off competition in the EV market. Tesla fell the most in the S&P 500 Index on Oct. 3 after reporting disappointing quarterly deliveries.
— Bloomberg News
Musk had been trying for months to back out of his contract to acquire Twitter, signed in April. The billionaire began showing signs of buyer’s remorse shortly after the deal was announced, alleging that Twitter had misled him about the size of its user base and the prevalence of automated accounts known as bots.
Musk formally quit the accord in July and Twitter sued him in Delaware Chancery Court to force him to go forward with the purchase. A trial is scheduled to begin Oct. 17. In the weekslong run-up to that showdown, lawyers for both sides have fired cannonades of subpoenas at each other aimed at teasing out testimony and evidence.
Musk’s side needed to demonstrate that Twitter violated the terms of the deal. Twitter alleged that Musk used the bots issue as a pretext for backing out a deal he no longer found economically sound.
Musk’s legal team was getting the sense that the case was not going well, as Judge Kathaleen St. J. McCormick sided repeatedly with Twitter in pretrial rulings, according to one person familiar. Even with the late emergence of a Twitter whistleblower who alleged executives weren’t forthcoming on security and bot issues, there were concerns Musk’s side would not be able to prove a material adverse effect, the legal standard required to exit the contract.
Inside Twitter on Oct. 4, many employees were sitting through 2023 planning presentations when the news first started to circulate, according to multiple sources. Presenters did not acknowledge the news, which staffers saw spreading on their own social network. Many employees have opposed the idea of working for Musk, who has been openly mocked and criticized on internal Slack channels since the deal was signed.
Twitter shareholders voted Sept. 13 to accept the buyout offer as Musk submitted it. The company said at the time that 98.6% of the votes cast were in favor of the deal. Musk, Twitter’s largest shareholder, didn’t vote at all, according to two people familiar with his decision. Musk owned almost 10% of Twitter — more than 73 million shares — when he agreed to acquire the company.
Musk was scheduled to answer questions about the deal in Austin, Texas, Oct. 6-7, according to a court filing Oct. 4. Twitter CEO Parag Agrawal was scheduled to sit down for his deposition Oct. 10.
— By Jef Feeley, Ed Hammond and Kurt Wagner. With assistance from Michelle F. Davis, Dana Hull, Maxwell Adler and Ed Ludlow.
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