The tech billionaire is abandoning his legal battle to stop his own takeover of Twitter, with the social media company confirming it plans to close the deal to sell.
Elon Musk is abandoning his legal battle with Twitter and reinstating his original offer to purchase the company for $44 billion (roughly €44 billion).
Musk made the offer in a letter to Twitter, which was also filed with the US Securities and Exchange Commission (SEC) before the close of trade on Tuesday.
This follows months of reciprocal legal battles and public recriminations from both sides after their original apparent agreement to a deal back in April.
It also comes just days before Musk was expected to be deposed before trial by Twitter’s lawyers and just under two weeks before the court case was scheduled to start at the Delaware Chancery Court.
According to the filing, Musk will complete the deal provided that he receives debt financing and so long as the court quashes the lawsuit from Twitter seeking to compel him to complete the deal.
Trading in Twitter shares halted prior to confirmation
Business publication Bloomberg News on Tuesday first reported that Musk made the proposal in a letter to Twitter — with legal actions between the two parties looming. It cited people familiar with the case who were not identified.
The report caught investors’ attention. Twitter shares jumped nearly 13% to $47.95 before trading was stopped, climbing towards Musk’s original offer valuing each share at $54.20.
The New York Stock Exchange then halted trade in the assets.
A few hours later, Musk’s letter to Twitter also made its mandatory appearance at the US Securities and Exchange Commission.
Why did the deal appear to be falling apart?
Musk appeared for months to be trying to back out of the deal, primarily accusing Twitter of downplaying the number of suspected “spam bot” accounts not belonging to distinct users and individuals on the platform.
A trial between the two parties was scheduled to start on October 17, with Twitter seeking to compel Musk to go through with the deal and Musk accusing the company of fraud in a countersuit.
Musk was scheduled for a deposition hearing with Twitter’s legal team later this week in preparation for the trial.
Recognition that Twitter likely to win in court?
Observers had commented in recent weeks that Musk appeared to be facing an uphill battle convincing the Delaware court that core information about Twitter had changed sufficiently since April to justify calling off the transaction.
Some saw Tuesday’s report as an indication of Musk and his entourage also coming to this conclusion.
“This is a clear sign that Musk recognized heading into Delaware Court that the chances of winning vs. Twitter board was highly unlikely,” Dan Ives, an analyst at investment bank Wedbush, wrote in a note to investors.
“Being forced to do the deal after a long and ugly court battle in Delaware was not an ideal scenario, and instead accepting this path and moving forward with the deal will save a massive legal headache.”
Musk’s own Twitter activities in recent focus
The news also coincides with the outspoken billionaire attracting negative attention for comments about Russia’s invasion of Ukraine, posted on Twitter.
Musk posted a poll on Monday asking if people approved of a proposed ceasefire framework under which Crimea would be “formally part of Russia, as it had been since 1783 (until Krushchev’s mistake),” and the recent so-called referendums in other partially occupied regions would be rerun “under UN supervision,” with Russia leaving “if that is the will of the people.”
“This is highly likely to be the outcome in the end — just a question of how many die before then,” Musk wrote.
The post prompted highly critical responses from Ukrainian officials in particular, including the ambassador to Germany, Andriiy Melnyk. The account for Ukraine’s parliament responded with one word: “No.”