Posted Oct 4, 2022, 6:50 PMUpdated Oct 5, 2022, 7:05 a.m.
Another volte-face by Elon Musk. The billionaire sent a letter to Twitter offering to buy the social network, at the initially agreed price of $54.20 per share, according to US media. Twitter’s share price soared 18% when that announcement dropped, before being suspended on Wall Street.
Twitter and Elon Musk were preparing to face each other in a Delaware court, starting October 17. In April, the billionaire had agreed to buy the social network, before changing his mind three months later. He highlighted the number of bots, or automated accounts, on the platform, to justify this refusal. Twitter pointed out, on the contrary, that it had signed a binding merger agreement.
Elon Musk sent a letter to the social network overnight from Monday to Tuesday. He would also have warned the Delaware court of his intentions, according to the “Wall Street Journal”. Twitter later confirmed that it had received this letter from Elon Musk, stressing that “the company’s intention is to complete this transaction”. The two parties are discussing the conditions under which the acquisition can finally take place, continues the WSJ.
This decision by Elon Musk saves him from engaging in an open legal dispute. “This is a clear indication that Musk admitted before going to court that his chances of winning against Twitter’s board were very slim, and that this deal was going to be implemented somehow. another,” commented Wedbush analyst Dan Ives. “Being forced to buy the social network after a long and bitter legal battle in Delaware was not the ideal scenario and agreeing to stick with the original agreement will save him a legal headache. »
The clash between Elon Musk and Twitter has already resulted in scathing attacks from both sides. “After putting on a show to get Twitter to consider his offer, and then offering and signing a seller-friendly merger deal, Musk apparently believes he has the right […] to change your mind, demolish the company’s reputation, disrupt its operations, destroy shareholder value and walk away,” Twitter wrote in its complaint.
A few days later, the billionaire had responded by filing a complaint in turn. He accused the social network of overestimating the number of monetizable active users, those who may be exposed to advertising on the platform. However, this is a key indicator for the group and closely followed by Wall Street. The social network ensures that the latter represent less than 5% of the users of the platform, while Elon Musk argued that this number was much higher.
Faced with the courts, the billionaire should have shown that the number of bots was much higher than that advanced by Twitter, but also that this difference would materially and durably affect the income of the social network. Which is very difficult to prove. Legal experts therefore agreed that the billionaire had very little chance of escaping his obligations.
According to Bloomberg, Elon Musk’s legal experts have expressed concern because the judge, Kathaleen McCormick, repeatedly sided with Twitter during pre-trial hearings. This is why Elon Musk would have ended up changing his mind again.