Elon Musk throws in the towel and proposes to go ahead with the purchase of Twitter at the original price

The actions of Twitter They have shot up on the stock market this Tuesday after the financial news agency Bloomberg has published that the tycoon Elon Musk is willing to go ahead with the purchase operation at the price agreed in April. The shares of the social network have climbed 13% shortly before the listing was suspended. Musk himself has subsequently confirmed his plans in a communication to the supervisor. The shares have returned to trading and have signed up at the close of 22%, up to 52 dollars.

Musk is willing to stick with its original offer of $54.20 per share, which implies valuing the company at about $44 billion (about 45,000 million euros at current exchange rates). The financier has transferred the proposal to the company in a letter. You have registered a copy of it with the United States Securities and Exchange Commission (the SEC).

It reads: “We are writing to notify you that Musk and his partners intend to proceed to the closing of the transaction contemplated in the merger agreement on April 25, 2022, in the terms and subject to the conditions established in the agreement. same and waiting to receive the debt financing funds contemplated therein, as long as the Delaware Chancery Court approves an immediate stay of the process Twitter vs. Musk (…) and suspend the trial and all other proceedings related to it until there is said closure or a new order of the Court”.

Musk’s lawyers sent the letter to Twitter after midnight from Monday to Tuesday and also filed a confidential brief with the Delaware Court of Equity ahead of a hearing scheduled for Tuesday. Musk has delayed declaring himself in the case before Twitter’s lawyers, which had sparked speculation about the possibility of a settlement. His subpoena was now scheduled for this week. He was due to testify in Austin, Texas on Thursday and Friday, while Twitter CEO Parag Agrawal was set to testify next Monday.

judgment in the air

Musk has declared the agreement broken three times and Twitter has sued the billionaire to comply with it. The trial was scheduled for the week of October 17 in Wilmington (Delaware), in what promised to be the business lawsuit of the century, uniting media significance (the eccentric richest man in the world against the popular social network) and economic ($44 billion at stake). Now the trial is up in the air.

Despite the fact that the richest man in the world is hyperactive on Twitter (now he has become entangled in a controversy over the Ukraine war) At the time of publishing the news, Bloomberg had not tweeted anything about it, nor has it done so in the hours since. In principle, the foreseeable thing is that an agreement is reached between the parties that ends the process, but the judge will probably want to make sure beforehand that it is not a maneuver by Musk.

The shareholders of the social network supported the operation at a shareholders’ meeting held on September 13, although and the day before, the favorable votes were enough to consider it approved. An overwhelming majority of 98.6% of shareholders who voted did so in favor of the sale, according to the results communicated by the company. The tycoon, who already controls 10% of the capital, did not participate in the vote. That forced Musk to close the operation in two days if it weren’t for the fact that he considered the agreement broken.

The also founder of Paypal, Tesla and SpaceX sent a letter on July 8 saying that he was breaking the purchase agreement because Twitter had too many fake user accounts, an argument that was not very convincing. Musk had always said that he bought the social network, among other things, to clean it of spamso it seemed more like an excuse to get out of the deal in the face of worsening market conditions.

Later, upon learning of a complaint from Peiter Zatko, the former head of security for the social network, Musk sent a second breakup letter at the end of August in which he said that the revelations of the former executive showed a breach of the merger agreements. And he still sent a third termination letter upon learning of the $7.75 million severance pay that Zatko himself received.

These shifting or cumulative arguments seemed a symptom of how little faith he had in his chances of winning the trial. In early August, she proceeded to sell shares of the electric car manufacturer Tesla worth 7,000 million dollars, just in case he was forced to buy the social network or pay compensation. At Tesla’s shareholders’ meeting, he was asked if he would dedicate himself more to that company or to managing Twitter and he joked: “I think Tesla would continue to do very well even if aliens kidnapped me or I returned to my home planet,” he said, provoking laughter and applause. “To be frank, I don’t have an easy answer,” he added.

Twitter’s demand was blunt: “In April 2022, Elon Musk signed a binding merger agreement with Twitter, promising to do everything possible to make the deal happen. Now, less than three months later, Musk is refusing to honor his obligations to Twitter and his shareholders because the deal he signed no longer serves his personal interests. Having put on a public show to put Twitter on the line, and having proposed and then signed a vendor-friendly merger agreement, Musk apparently believes that he—unlike any other party subject to Delaware contract law—is free to change your mind, wreck the company, discontinue operations, destroy shareholder value, and walk away.”

The entire story of the negotiations to carry out the operation, in which Musk himself gave up a thorough review (due diligence) of the company, as usual in these cases, seemed to support the thesis of the social network. The preliminary investigations that were being carried out had already revealed how Musk was able to close multi-billion dollar deals with other partners to finance the operation through simple text messages.

The judge or chancellor Kathaleen McCormick, 42, was in charge of resolving the case, without the need for a jury, and her record is that of someone who enforces contracts, unless there is a very obvious breach, which did not seem to occur in This time. The general impression among experts was that Musk’s chances of succeeding at trial were slim. That seems to have led him to give up and go ahead with the operation, although with Musk and his fickle character, there is always room for a new surprise.

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Elon Musk throws in the towel and proposes to go ahead with the purchase of Twitter at the original price