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Elon Musk confirms proposed buyout for Twitter

10/05/2022
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New twist in the controversial issue related to Elon Musk’s April bid to buy Twitter.

News on Elon Musk and his takeover of Twitter

In yet another sensational twist to which this figure has accustomed us by now, Elon Musk seems intent on renewing his proposal to take over Twitter for $44 billion. 

This is at least what the company itself announced, claiming to have received a letter to that effect from Musk’s lawyers, who were supposed to defend him precisely in the lawsuit filed by Twitter over the cancellation of the takeover offer by the Tesla founder.

The letter that Musk’s attorneys allegedly sent to Twitter contained a proposal to proceed with the settlement at $54.20 per share, as previously agreed, if the Delaware Chancery Court, which was to hold the trial on 17 October, agreed to decree an immediate halt to the case and adjourn the trial and all other related proceedings. 

In response, Twitter reportedly said it was willing to dismiss the case: 

“We received the letter from the Musk parties which they have filed with the SEC. The intention of the Company is to close the transaction at $54.20 per share.”

As soon as the news broke, Twitter’s shares literally flew on the stock market, closing at $52, up more than 21%. But Twitter’s response was cautious nonetheless, because the company’s lawyers do not seem to trust Musk too much, and believe that this could be a simple legal ploy, to suspend the now imminent lawsuit.

Elon Musk’s second thoughts on buying Twitter

Musk had withdrawn his proposed purchase because he accused Twitter of failing to provide requested data that related to the number of bots and/or fake profiles that were registered on the social network. The company argues that this was merely a pretext to be able to withdraw, with no grounds for truth, since they had provided all the necessary documents to carry out the investigation of the case. 

Musk’s lawyers had intended to bring as evidence statements made by Peiter Zatko, the company’s former head of security, who allegedly exposed huge flaws in the company’s security system, such that they even endangered national security and essentially giving reason to Musk’s arguments about the lack of controls on fake profiles and bots.

But the decision by Musk and his legal team would seem to be motivated by the fact that according to some rumors, there was a high likelihood that the lawsuit would be lost, not least because Elon Musk allegedly had a bad record in other lawsuits in the very same Delaware court.

Musk, within a short time, tweeted one of his proverbial cryptic messages in which he declared that:

“Buying Twitter is an accelerant to creating X, the everything app.”

What he means exactly is yet to be discovered, but his desire to own the social network evidently seems to have regained new momentum. Perhaps he has been thinking in recent months about how to relaunch it or use it to his advantage for his current activities.

To the Washington Post, Anat Alon-Beck, professor of business law at Case Western Reserve University, said:

“Musk is finally listening to his lawyers. He would be a fool to not at least try to buy the company now and avoid being deposed.”

On its part, Twitter is lamenting the powerful drop in its image and consequently in its stock price, precisely because of Musk’s withdrawal of the bid and from allegations aimed at flaws in internal control and its security.

Musk’s vision

Musk had enthusiastically signed on to the possibility of becoming the owner of the social network that he uses daily to dispense not only news about his activities but also tips and advice to his more than 100 million followers. And he claimed he wanted to make the social network a free and independent place. One of his first actions as owner would be to lift the ban on former President Donald Trump‘s use of Twitter.

In order to comply with this purchase he had also arranged to sell some of his Tesla shares and to finance himself with a pool of banks. His gesture had also been much appreciated by former CEO and founder Jack Dorsey, now committed to his Blockchain company. 

Then the sudden U-turn, perhaps also due to second thoughts from a financial point of view for an operation whose economic implications are still to be deciphered, since Twitter is certainly not having a good time from the point of view of revenues.

But Musk is a man made that way, idealistic and always looking for the knockout blow, such as the one operated in recent days regarding the Russian-Ukrainian conflict. In fact, the Tesla founder has proposed his own peace plan that includes the final annexation of Crimea to Russia, a repeat of the referenda, and a neutral Ukraine. A plan that clearly sent Ukrainians into a rage.

What is puzzling to some experts is that after all this commotion, Elon Musk failed to wring even the slightest discount from the initial offer, which had indeed seemed a bit excessive, considering the stock market values and economic performance of Twitter.

Evidently, the near certainty of losing the lawsuit convinced Musk to make the same offer again to close the deal without going to trial.

As Twitter prepares to accept the takeover offer again, which the board had already approved in April, it is also thinking about how to guard against any new headshots from the whimsical Musk. 

Twitter could, for example, go to trial to get a favorable ruling that could require Musk to put the entire purchase price into an escrow account before the deal itself closes.

It will be seen how the affair will end, but what is certain is that once again Elon Musk has not failed to live up to the expectations of his many admirers, who also love him for his often impromptu and surprising, and almost never trivial, ways.

 

Source: https://en.cryptonomist.ch/2022/10/05/elon-musk-confirms-proposed-buyout-twitter/