Elon Musk has offered to proceed with a deal to buy Twitter at the price he proposed months ago before trying to call it off, according to a legal filing, a stunning development weeks before the two sides were due to face off in a trial.
On Tuesday, Twitter said it received the letter and intended to close the transaction at the original share price offered by Musk’s team. The company plans to accept the offer but is waiting for confirmation that the judge can oversee the process, said a person familiar with the discussions who spoke on the condition of anonymity to describe sensitive matters.
Elon Musk’s texts reveal what led to the Twitter bid, before the deal fell apart
Musk’s offer comes at a key moment in the lead-up to the trial, which was due to settle months of legal wrangling between the billionaire and the social media company following Musk’s moves in July to terminate his planned $44 billion purchase of Twitter.
Both sides had been conducting depositions. Musk’s side collected testimony from Twitter chief executive Parag Agrawal and whistleblower Peiter Zatko, the company’s former head of security, who alleged extreme deficiencies in Twitter’s security practices and inaccuracies in its filings to security regulators, according to court schedules.
Two people briefed on Zatko’s sworn interviews said they did not produce any revelations that would have helped Musk’s effort to escape the deal without incurring significant costs. Twitter also deposed Zatko.
Musk was scheduled to be deposed in the case Thursday in Austin, where he lives after the original date was scrapped, the filings showed. His attorney Alex Spiro’s deposition was expected to follow on Sunday in New York.
Musk and his attorney did not respond to requests for comment Tuesday. The tech mogul weighed in on Twitter on Tuesday afternoon, however.
“Buying Twitter is an accelerant to creating X, the everything app,” he wrote. That letter is also used in his holding entities for the Twitter purchase, X Holdings.
Legal experts say Musk’s willingness to close the deal suggests that he may have realized that he was in a weaker position than he wanted to go into the trial and deposition.
“Musk is finally listening to his lawyers,” Anat Alon-Beck, a business law professor at Case Western Reserve University, said in an email. “He would be a fool not at least to try to buy the company now and avoid being deposed.”
Bloomberg News first reported news of the offer. Twitter shares were suspended Tuesday at their highest level months after the report.
“This is a clear sign that Musk recognized heading into Delaware Court that the chances of winning versus Twitter board were highly unlikely,” Dan Ives, an analyst with Wedbush Securities, wrote in a note Tuesday. “This $44 billion deal was going to be completed one way or another.”
The court held an emergency hearing Tuesday morning with both sides. Musk was willing to drop the case, but Twitter wanted assurances that the court would oversee the process because of the distrust, the person familiar with the discussions said.
For months, Musk has argued that he should be entitled to exit the deal because of representations Twitter had made regarding spam and bots on the platform, but legal experts said Musk had waived due diligence by proceeding with the deal.
Twitter has been thrust into internal chaos this year, facing a tumultuous stock decline and an increasingly uncertain future with Musk. Many senior executives and rank-and-file workers have left the company or have been fired.
Elon Musk attempts a hostile takeover of Twitter, calling the path ‘painful.’
The billionaire chief executive of Tesla took a large stake in Twitter earlier this year and launched a hostile takeover bid in April. The company was at first hesitant to accept his offer but eventually acquiesced.
While Musk’s interest in owning Twitter initially seemed surprising, one motivation for his purchase was made clearer in text messages revealed in court documents last week: He was increasingly frustrated with what he saw as the encroachment on free speech by content moderation decisions. Musk said in a TED interview in April that he wanted an “inclusive arena for free speech.”
He also said he would reverse the ban on former president Donald Trump, saying at an event in May that it “was a morally bad decision, to be clear, and foolish in the extreme.” Twitter permanently banned Trump after the Jan. 6, 2021, insurrection.
The text messages also show that Twitter co-founder and former chief executive Jack Dorsey was one of Musk’s biggest supporters in the process and was often at odds with the board, which was often scrambling to understand Musk and his motives. The texts reveal an elite cast of characters, including celebrities, high-profile investors and media barons, who gave Musk input on the deal, made hiring suggestions and sometimes encouraged him to let right-wing figures who were banned by Twitter back on the platform.
But the outspoken executive, who has more than 107 million followers on Twitter, moved to back out of the deal months later, arguing that he had a right to drop out of the agreement because Twitter hadn’t given him enough information about the company’s business.
Twitter and Musk have been locked in litigation ever since.
Musk soured on the deal amid economic pressures, as the impact of his offer caused a blow to Tesla’s stock — the key source of his wealth — and his net worth. He had planned to finance the deal through a combination of loans and a $33 billion equity commitment tied to his wealth, which would draw on investors.
Musk sold nearly $7 billion worth of Tesla stock in anticipation of having to close the deal in early August, after the battle was already going to court, surprising some investors.
“In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” he wrote on Twitter.
In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.
— Elon Musk (@elonmusk) August 10, 2022
Several employees said the renewed offer was not immediately announced inside Twitter, speaking on the condition of anonymity, leaving employees to learn about it the same way their users did: on Twitter.
But in an email to Twitter employees Tuesday afternoon, obtained by The Washington Post, Twitter General Counsel Sean Edgett informed them of Musk’s offer, adding, “We intend to close the transaction at $54.20 per share,” echoing the language of Twitter’s public statement.
Employees began to sound off on the platform Tuesday, expressing shock after months of deliberations. Some conveyed scepticism that the letter was sincere. One employee summed up the mood by saying, “Congrats or I’m sorry, y’all” in an internal Slack message described to The Post.
The prospect of Musk buying Twitter had already opened rifts among the company’s ranks, as his critical tweets about the company and planned to reverse key policies, including its ban on Trump, rankled many employees. Meanwhile, the company’s value slid amid economic woes and a decline in the social media advertising market, and in July, Musk filed to back out of the deal, setting the stage for the court battle.
At least one employee, speaking on the condition of anonymity because they were not authorized to discuss their job, said Tuesday that they couldn’t imagine staying at the company if Musk became the owner.
The possible resolution comes alongside a major downturn for internet stocks, prompting layoffs and hiring freezes at industry heavyweights. The possibility that Musk might end up acquiring Twitter at the original price has helped the company’s shares hold much of their value during a year when social media rivals Meta and Snap have shed more than half of theirs.
Bob Thompson is our inhouse Home and Garden, Energy and Gaming news writer. Bob is keenly aware of the need to recycle. Bob has written for many online publications over the course of his writing career, before joining our team.