Elon Musk offers to buy Twitter for $44bn, again
Image credit: reuters
Twitter has confirmed it plans to agree to Elon Musk's offer to buy the social media company for $54.20 (£47.20) per share, the same price Musk had offered in his original deal in April this year.
Elon Musk has offered to buy Twitter for $44bn (£38.3bn) for the second time this year.
In a letter sent by Musk's attorneys, the billionaire's intention to move ahead with the original deal was confirmed, pending receipt of the financing and an end of the legal fight.
The news comes just two weeks before the two sides were scheduled to meet in Delaware's Court of Chancery, on October 17, where Twitter was preparing to sue Musk to either complete the deal or pay the previously agreed $1bn penalty for reneging on the deal.
“We received the letter from the Musk parties which they have filed with the SEC," said a Twitter spokesperson. "The intention of the company is to close the transaction at $54.20 per share."
The announcement is the latest twist in a long-running saga after the world’s richest person announced his intention to buy Twitter in April 2022, only to place the deal “on hold” the following month, stating that the acquisition could not go forward until the company provided information about how many accounts on the platform are spam or bots.
In response, Twitter filed its lawsuit against the billionaire with the goal of forcing him to complete the deal and buy the company or pay a substantial sum for breach of contract. As part of the proceedings, Twitter CEO Parag Agrawal had been set to be deposed by Musk’s lawyers on Monday, while Twitter’s lawyers had planned to depose Musk starting on Thursday.
The agreement would thus put the world's richest person in charge of one of the most influential media platforms and bring to a close a period of conflict that has damaged Twitter's brand and fed Musk's reputation for erratic behaviour, to the point of damaging Tesla's standing.
After the news of the lawsuit was made public, Musk tweeted that buying Twitter would speed up his ambition to create an "everything app" called 'X'.
Musk said in July that he could walk away without penalty by stating that Twitter breached the agreement first, by misrepresenting the number of spam accounts in its disclosures to the US financial watchdog and, further, for failing to consult with Musk when firing senior employees recently.
The billionaire businessman had asked for evidence to back the company’s assertion that spam and bot accounts make up less than 5 per cent of its total users. Twitter has always denied the accusations.
“Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value and walk away,” Twitter’s lawsuit read.
Bots are automated accounts and their use can lead to overestimations of how many real humans are on Twitter's service, which is an important metric for advertising rates and the overall value of the service.
The problem of bots and fake accounts on Twitter is not new. In 2021, the company paid $809.5m (£641m) to settle claims it was overstating its growth rate and monthly user figures. Twitter has warned that its estimate might be too low in its disclosures of bot estimates to the Securities and Exchange Commission (SEC).
In a published court document, Twitter accused Musk of “looking for an excuse” to get out of the deal, with the firm calling Musk’s accusations “factually inaccurate, legally insufficient and commercially irrelevant”.
It was not immediately clear why Musk chose to abandon his fight, although some pointed to his scheduled deposition. In the past, Twitter executives have also argued that Musk - the world's richest person - wanted out because he was worried about the price.
"He was about to get deposed and a lot of uncomfortable facts were going to come out," said Eric Talley, a professor at Columbia Law School.
Musk has an estimated net worth of $273.6bn (approximately £214.71bn), mostly due to his shareholding in electric vehicle-maker Tesla, which he runs, as well as aerospace company SpaceX. In the past, the billionaire has been accused of manipulating Twitter and Tesla’s share price, breaking SEC rules.
In order to finance the Twitter acquisition, Musk has sold $15.4bn (£13.8) worth of Tesla shares and also putting others up as collateral for personal loans to raise cash. By maintaining the original price, Musk would likely still be able to rely on the billions of dollars committed by a group of A-list investors, including banks such as Morgan Stanley, Bank of America Corp, Mitsubishi UFJ Financial Group Inc and Barclays Plc to support his acquisition.
Musk's acquisition of Twitter has been controversial in the court of public opinion, as he has a long history with the site. In the past, Musk has blocked people on the platform who have criticised him or his companies; been sanctioned by the US over tweets about Tesla’s business, and was sued for defamation after calling British cave diver Vernon Unsworth a “pedo guy” for his part in helping to rescue 12 trapped children.
The billionaire, however, has said Twitter has “tremendous potential” that he would unlock, claiming that he wanted to own the company not for its monetary gain, but for his personal commitment to protecting free speech.
“Free speech is the bedrock of a functioning democracy and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said.
Musk is not the only tech leader to own media companies. His takeover of Twitter follows Bezos’ acquisition of the Washington Post and Marc Andreessen’s financing of Clubhouse, raising concerns regarding how the technology industry might use its control of social media platforms to influence public discourse.
After the news of a new agreement were made public, Twitter shares went up by more than 20 per cent, topping $51 a share and approaching the agreed-upon deal price for the first time in months.
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