new York The boss of the electric car manufacturer Tesla, Elon Musk, is making a U-turn in the dispute over the takeover of the short message service Twitter. The billionaire wants to take over the company after all. Musk confirmed this in a mandatory statement to the US Securities and Exchange Commission on Tuesday. The Bloomberg agency and the Wall Street Journal had previously reported in unison, citing insiders.
Musk’s attorneys said he had proposed in a letter that the deal be completed at the originally agreed purchase price of $54.20 per share. Twitter shares rose 22 percent in New York trading to $52.05. After the media reports were published, the share had already risen by 18 percent and trading was briefly suspended.
Musk had been trying for months to get out of his deal to acquire Twitter, signed in April. He initially claimed that Twitter had deceived him about the size of its user base and the proliferation of fake accounts, so-called bots. He later accused Twitter management of breaching the takeover agreement.
According to analysts, the reversal comes amid the looming trial in the Delaware court, which both Musk and Twitter have called. Wedbush analyst Dan Ives said the move was “a clear sign” that Musk has recognized that it is “highly unlikely” to “win a court case against the Twitter board.” “Given the legal hurdles, it’s a smart move by Musk to go through with the deal.”
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The $44 billion deal would likely have gone through “either way.” But “having to close the deal in Delaware after a long and ugly court battle wasn’t an ideal scenario.” Going on the offensive now would save “massive legal headaches,” Ives said. The risk that the takeover will ultimately fail due to supervision is minimal. The new Twitter owner Musk should “trigger a firestorm of concerns and questions among users and those around them”.
Open financing question
If Twitter accepts the renewed purchase offer, both sides will avoid a five-day hearing that the responsible judge in Delaware had scheduled for October 17th. The court had recently positioned itself in several procedural steps in the sense of Twitter, which had apparently increased concerns about failure in Musk’s legal team.
With the announcement that Twitter will be taken over after all, the question of financing the takeover and Musk’s plans for the platform arise again.
Tesla stock reacted positively to the news on Tuesday. Apparently, the shareholders are now hoping that the months-long takeover battle will finally be clear. The fuss surrounding the planned Twitter entry had weighed on the course in recent months. Analysts fear that Musk will have to sell larger blocks of shares to finance it – and that will send Tesla into a tailspin. Several short sellers are betting against the Tesla boss.
What the tech billionaire intends to do with Twitter is so far unclear.
(Photo: AP)
It has long been speculated in financial circles that Musk’s public criticism of Twitter is primarily intended to lower the purchase price. His blocks of shares in the carmaker Tesla, which were intended to secure the purchase, had lost value in the tech downturn of 2022. Suddenly the purchase price of 44 billion dollars seemed overpriced in the Musk environment.
“Twitter’s leadership provides an additional distraction for Musk at a time when Tesla’s revenue growth is slow,” Musk critic Mark Spiegel of Stanphyl Capital wrote to Handelsblatt. “If I were a Tesla shareholder, it wouldn’t make me happy.”
It is unclear exactly what Musk wants to change on Twitter. The billionaire has not suffered well under many employees. Twitter CEO Parag Agrawal has a dislike for him. At the same time, Twitter has been in a strategic crisis for years.
Complicated acquisition
Musk had already started buying Twitter shares as of January 31. The structure was initially secret, which brought him a procedure with the US Securities and Exchange Commission (SEC). This accuses Musk of not having informed about the purchase within the prescribed period. At the beginning of April, the billionaire was Twitter’s largest single shareholder with more than nine percent and declared his willingness to take over in mid-April.
As a result, Musk consulted with numerous investors and tech billionaires about buying Twitter. SMS logs contained in letters from the lawyers, which the Delaware court published at the end of last week, allowed an insight into the communication. Accordingly, numerous contacts and business friends served Musk for weeks to help with the takeover.
Tech investor Marc Andreessen and the head of crypto exchange FTX, Sam Bankman-Fried, were among those who courted Musk’s attention via text messages.
Musk was even written to from Germany: Axel Springer boss Mathias Döpfner offered to manage Twitter for Musk, as the “Spiegel” had first reported. “We’ll manage it for you. And build a true platform for freedom of expression,” wrote Döpfner. “It’s going to be fun.” Musk called the plan an “interesting idea,” but according to the text messages, he didn’t take up the offer.
Musk waived due diligence and struck a deal with Twitter in late April, but then backed down. In mid-May, he said he would temporarily put the deal on hold, arguing that he wanted accurate data on the proportion of fake Twitter accounts first. Musk formally resigned in July, and Twitter sued for the completion of the takeover agreement.
More: Twitter shareholders approve Musk’s purchase – the most important answers to the takeover dispute