Musk is changing course, yet again: He’s ready to buy Twitter and build the ‘X’ app

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Elon Musk raises his phone to the sky during a press conference at the SpaceX Starbase in Brownsville, Texas, U.S. August 25, 2022. REUTERS/Adrees Latif/File Photo

Billionaire Elon Musk offers to go ahead with his initial $44 billion bid to take Twitter Inc private.

A deal would put the world’s richest person in charge of one of the most influential media platforms and end months of litigation that has damaged Twitter’s brand and fueled Musk’s reputation for erratic behavior.

Musk, the chief executive of electric car maker Tesla Inc, will take over a company he originally pledged to buy in April, but which has quickly deteriorated.

Twitter shares jumped 22.2% to close at $52.00, while Tesla shares gained 2.9% to $249.44.

The news comes ahead of a much-anticipated showdown between Musk and Twitter in the Delaware Court of Chancery on October 17, in which the social media company was to seek an order ordering Musk to complete the deal for $44 billion.

Musk sent a letter to Twitter on Monday saying he intended to proceed with the deal under the original terms if the Delaware judge stayed the proceedings. A source close to the Twitter team told Reuters that during a hearing on Tuesday morning, the judge asked both sides to report back in the evening.

It was not immediately clear why Musk chose to give up his fight. He was about to be deposed, which could have included a tough interrogation. “He was about to be deposed and a lot of uncomfortable facts were going to come out,” said Columbia Law School professor Eric Talley.

Twitter received Musk’s letter and intended to close the deal at the original price of $54.20, a spokesperson told Reuters. Twitter did not say whether it would accept Musk’s offer.

Musk, one of Twitter’s most prominent users, said in July he could walk away without penalty because the number of bot accounts was well above Twitter’s estimate of less than 5% of users. . Bots are automated accounts, and their use can lead to overestimates of the number of humans on the service, which is important for advertising rates and the overall value of the service.

Twitter’s legal team said on September 27 that documents obtained from two data scientists employed by Musk showed they estimated the number of fake accounts on the platform at 5.3% and 11%.

“None of this analysis, as far as we can remotely tell, supported what Mr. Musk said on Twitter and told the world in the termination letter,” said Twitter attorney Bradley Wilson. to the court.

The original deal was “a very seller-friendly deal that would be very difficult to get out of,” said UC Berkeley law professor Adam Badawi. Musk realized, he said, “in all likelihood, that was going to force him to close at $54.20 per share.”

Funding

A settlement between the two sides would reignite fears among Twitter users about Musk’s plans for the platform, which has suppressed prominent politically conservative voices. Donald Trump supporters hope Musk will reactivate the former US president’s account, which was banned after the January 6, 2021 attack on the US Capitol by his supporters.

Musk has used Twitter to stir up controversy, including on Monday when he presented a peace plan for the Ukraine-Russia war that was quickly condemned by Ukrainian President Volodymyr Zelenskiy.

Bloomberg was the first to report that Musk was willing to pay the initial price.

A settlement at the original price would also allow Musk to finance the transaction without any complications. If Musk and Twitter had renegotiated the price, that would have technically allowed committed backers to walk away.

Musk has already sold $15.4 billion worth of Tesla stock since agreeing to buy Twitter. He said he no longer plans to sell his stake in Tesla, but some analysts expect him to sell more of his stake to fund the Twitter deal.

Musk has also secured a funding commitment from banks — including Morgan Stanley, Bank of America Corp, Mitsubishi UFJ Financial Group Inc and Barclays Plc — to provide a $12.5 billion margin loan to support his acquisition of Twitter.

The banks that agreed to finance the acquisition stand to lose hundreds of millions of dollars on the deal as they would struggle to attract investors to buy the debt, given the downturn in markets since the deal was signed. .

However, the banks have agreed to provide the funding regardless of whether they can sell the loans and face long legal chances to free themselves from the funding commitment, according to regulatory documents.

Given that Twitter has already received shareholder support for the sale to Musk, the deal could close quickly in the coming weeks if the two parties were to agree on initial terms. In June, Twitter said the waiting period for antitrust clearance had expired, indicating the deal could go ahead.

READ MORE:

Musk says Twitter deal should go ahead if he provides proof of real accounts

Most Twitter shareholders vote in favor of selling to Elon Musk – sources

Learn more: https://business.inquirer.net/362154/most-twitter-shareholders-vote-in-favor-of-sale-to-elon-musk-sources#ixzz7gnYg799g
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