Elon Musk proposes to buy Twitter at original $44B price to avoid trial
Elon Musk has made a surprise offer to close his original deal to buy Twitter for a whopping $44 billion — a seeming admission of defeat and bid to avoid a court trial over the hotly contested agreement, sources told The Post.
The world’s richest man is in talks for a settlement to acquire the social network for $54.20 per share — the same price he agreed to in April before saying in July he was pulling out of the deal, according to sources close to the talks.
Twitter shares, which have yo-yo’d as investors have watched Musk’s bizarre courtship of the company sour, surged 22% to close at $52. That means the market believes there’s a 92% chance the deal closes at $54.20, a hedge fund manager said. Trading in the stock had been halted for hours on Tuesday afternoon due to pending news after Bloomberg first reported on Musk approaching Twitter but reopened shortly before markets closed.
Musk alerted Twitter’s lawyers of his offer late Monday night and the two sides worked toward hashing out an agreement in a private Delaware Court of Chancery hearing Tuesday morning, according to a source. Another hearing was slated for Tuesday afternoon but was planned to be closed to the public, the source added.
Months of bad blood with Musk have made Twitter insistent that the Delaware court supervise the closing process in the coming days. If everything goes as expected and Musk doesn’t try to pull any last-minute “gotchas” on Twitter, the knock-down, drag-out fight should end when a deal closes — realistically within days or at most a week, a source familiar with the matter said.
Musk acknowledged the settlement offer in a tweet late Tuesday, saying that Twitter will be part of a future “everything app.”
“Buying Twitter is an accelerant to creating X, the everything app,” Musk said.
Still, there’s a chance that the famously fickle Musk changes his mind before everything has been finalized, analysts following the case said.
Twitter sued Musk over his refusal to go through with the deal in a trial that was set to open on Oct. 17. Musk was scheduled to be deposed by Twitter’s attorneys on Thursday and Friday this week, raising the prospect that the last-minute deal was made in part to avoid the deposition.
“This is a complete surrender,” investment researcher and former corporate attorney JB Heaton said of Musk’s offer to settle, arguing that it amounts to Musk admitting that his arguments about bots would not stand up to legal scrutiny.
“It can’t really be explained rationally except that he may have just been unwilling to go into that deposition and say the things that he would’ve had to say because they would’ve been untrue,” Heaton said.
“There’s certainly no evidence we’ve seen in the public that anything he’s saying [about bots] is true,” Heaton added. “People don’t easily choose to perjure themselves.”
Still, Twitter will not agree to cancel Musk’s deposition or call off the Oct. 17 trial until a final settlement has been signed by both parties and approved by the court, Heaton predicted. Thursday’s scheduled deposition amounts to a “sword hanging over” Musk, he said.
A source close to the situation said Twitter is considering letting Musk push back the deposition date by one week as the two sides finalize the settlement. Twitter CEO Parag Agrawal was deposed on Monday, according to a source close to the situation.
“We received the letter from the Musk parties which they have filed with the SEC,” a Twitter spokesperson said in a statement. “The intention of the Company is to close the transaction at $54.20 per share.”
An attorney for Musk declined to comment, but Musk confirmed the settlement offer through Securities and Exchange Commission filings on Tuesday.
Around 2:30 p.m., Musk liked a tweet from a Bloomberg reporter that was an image of a recently-unveiled Tesla robot with the caption “Welcome to Twitter’s new CEO.”
Analysts who cover Twitter say that $54.20 is an astronomically high price to pay for the scandal-plagued social media site. Without Musk’s involvement, Twitter would be trading in the $20 range, analysts say.
Even as rumors swirled for months of Musk negotiating down Twitter’s price, influential Twitter board member and Silver Lake managing partner Egon Durban may have been insistent that he would not accept anything less than $54.20 per share, a source familiar with Durban’s thinking speculated.
If Twitter accepts Musk’s proposal, the company would withdraw its lawsuit against Musk in Delaware’s Court of Chancery. Musk would also have to withdraw a countersuit he filed against the company.
Settling for $54.20 per share could also help Musk avoid costly pre-judgment interest payments that could have driven up Twitter’s price by hundreds of millions of dollars.
Musk is financing his Twitter buyout through cash, co-investors and $25 billion in loans from a group of banks that is led by Morgan Stanley and also includes Bank of America and Barclays.
Given an increasingly tough corporate debt market and Musk’s “erratic” management style, the banks are likely to take large losses on the loans if they sell them off, Heaton said.
“The banks are just going to get absolutely killed on this debt, but they don’t have any out,” Heaton said. “It’s going to be very bad for them.”
It’s unclear whether Musk’s co-investors, which include Oracle co-founder Larry Ellison and venture capital giant Andreessen Horowitz, will still be involved in the deal. Details of their agreements with Musk have not yet been made public.