Elon Musk plans to purchase social media company Twitter at his original offer price.
After months of legal battles, the world’s wealthiest man proposes to buy the platform at $54.20 per share. This would be a total of $44bn (PS38.4bn)
Trading in Twitter shares was stopped earlier after the stock spiked due to reports that the deal had been renegotiated. Before trading was stopped, the shares were up nearly 13% to $47.93
Musk stated that he would stick to the original agreement in a Twitter letter. He also disclosed the matter in a Tuesday filing to the U.S. Securities and Exchange Commission.
According to the filing, he will complete the deal if he obtains the required debt financing and if the Delaware Court of Chancery (where he was scheduled to appear in less that two weeks) rejects the lawsuit.
Musk’s lawyers sent him a letter in which he stated that Musk Parties intended to close the transaction… and to adjourn the trial as well as all other proceedings.
“This is a clear indication that Musk recognized heading into Delaware Court that the odds of winning against Twitter board were highly unlikely and that this $44bn deal would be completed one way or the other,” stated Dan Ives, analyst from investment firm Wedbush.
Tesla CEO Musk wanted to renegotiate the deal due to the large number of bot accounts that the platform had.
He claimed it was higher than Twitter’s estimate at 5% users, and that he could end the deal in July.
Bots are automated accounts that can overestimate the number of people who use the website. It is crucial to know the true number of users in order to increase advertising sales and improve the platform’s overall value.
Twitter shareholders had approved the takeover agreement last month.
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As of Tuesday’s midday New York Time, more than $16bn in Tesla shares had been traded. This led to a plunge in stock values that rebounded in the afternoon.
Mr Musk’s proposal may bring an end to months of litigious chaos that was about to turn into a battle at Delaware’s Court of Chancery, 17 October.
Twitter’s reputation has been damaged by legal disputes that involved senior Twitter executives and Mr Musk’s texts.
Rumman Chowdhury, a director of the Machine Learning Ethics Transparency and Accountability program at Twitter, stated on Tuesday that “I am sitting on 2023 company-wide strategy readouts and it seems we are going collectively to ignore what’s happening”.
In the past, Musk has used Twitter to create controversy. He suggested a peace plan to end the Ukraine-Russian war, which was swiftly condemned by Volodymyr Zelenskyy, the president of Ukraine.
Musk said that he would also overturn the ban placed on the site by Donald Trump.
According to the text messages discovered during litigation, Musk intended to alter the platform by fighting spam by verifying accounts and hosting money transfers. He also wanted to create Twitter subscriptions rather than relying solely on advertising.
Twitter responded to Mr Musk’s letter by saying: “We have received the Musk parties letter which they have filed with SEC. The company intends to close the transaction at $54.20 per shares.
However, Mr Musk is not out of trouble. He now needs to raise the funds he needs in order to purchase Twitter. Investors fear that he might sell stock in Tesla, his company’s electric car company, to finance the purchase of Twitter.