Elon Musk agrees to £38bn Twitter takeover: Billionaire U-turn avoids courtroom showdown
Last night Elon Musk agreed to buy Twitter for £38billion just months after he said the deal was off.
In a U-turn that stunned Wall Street and the City, the billionaire asked the social media giant’s board to go ahead with its $54.20 per share offer.
And in a statement, Twitter said it intended to “close the transaction” at that price.
U-turn: Elon Musk told social media giant Twitter’s board to go ahead with his $54.20 per share bid
Shares of Twitter jumped 22% to over $52, but electric car maker Tesla gave up early gains amid fears the deal could upset boss Musk.
The move came just two weeks before the start of a courtroom showdown between Musk and Twitter in one of the most high-profile legal battles in corporate American history.
The two sides would go head-to-head in a Delaware court on October 17 when Twitter was to seek an order ordering Musk to close the deal at $54.20 per share or £38 billion.
Industry experts suggested Musk might have revived the deal to end a lawsuit he was unlikely to win.
Wedbush analyst Daniel Ives said the new takeover proposal was a “clear sign”. Musk acknowledged that his efforts to pull out of the deal were “highly unlikely” to succeed.
“Being forced to complete the deal after a long and ugly legal battle in Delaware was not an ideal scenario and accepting this path and moving forward with the deal will avoid a huge legal headache,” a- he declared.
The battle for Twitter erupted in April when Musk revealed he had scooped around a tenth of the company, making him the largest shareholder.
The 51-year-old snubbed an offer to join Twitter’s board and within weeks launched his £38billion swoop on the blogging site.
Twitter initially sought to fend off the tycoon’s advances, adopting a so-called “poison pill” defense.
But within a month, its board, led by chief executive Parag Agrawal and chairman Bret Taylor, recommended shareholders accept Musk’s offer.
But the deal was thrown into doubt when the South African said he was putting his offer “on hold” amid a dispute over the number of “bots”, or fake accounts, on the site.
Will he sell Tesla shares to fund the deal?
Elon Musk’s resumption of Twitter takeover will shine a new spotlight on the finances of the world’s richest man – in a year that has already seen more than £42billion wiped out his fortune.
Musk and Twitter say they want to complete the deal at the previously agreed price, which should mean it can go ahead without further complications.
Musk has already sold £13.4billion of shares in his electric car company Tesla since agreeing to buy Twitter and said he no longer plans to sell his stake. But some analysts believe he will do so in order to fund the Twitter deal.
Tesla founder Musk has already sold £13.4bn of shares in his electric car company Tesla since agreeing to buy Twitter
Musk is the richest man in the world with a fortune of £194billion according to the Bloomberg Billionaires Index.
But that fortune has fallen by £42billion since the start of the year – more than the £38billion he pays for Twitter.
The deal could also reignite fears among Twitter users about Musk’s plans for the platform, which has suppressed conservative voices.
Fans of former US President Donald Trump are hoping Musk will reactivate his account, which was shut down after the January 2021 attack on the US Capitol by Trump supporters.
Musk is an outspoken user of the platform, which recently sparked controversy with a Russia-Ukraine peace plan that was condemned by Ukrainian leader Volodymyr Zelensky.
Musk argued that Twitter’s public estimates that less than 5% of accounts are fake were wrong – suggesting the figure was as high as 20%.
He lobbied Twitter in June by threatening to walk away from the deal altogether, accusing the company of a “material breach” of its obligations.
And when Musk finally confirmed suspicions that he had remained cold on the deal, shares tumbled, taking losses to more than a third since revealing his 9.2% stake.
Twitter responded by suing Musk – who is worth an estimated £205billion – in a bid to force him into the deal.
As part of the deal reached in April, Musk and Twitter had agreed to pay each other a billion-dollar severance fee if either was responsible for its failure.
This set up a bitter battle, but one that many observers thought was unwinnable for the billionaire. The legal battle saw dozens of private messages from Musk with well-known tech figures made public.
The case also saw Musk attempt to use Twitter whistleblower Peiter Zatko’s claims to nullify the deal.
Former security chief Zatko claimed the social media site’s executives misled regulators and the company’s board of directors about flaws in its defenses against hackers.
An emergency hearing in the United States on Musk’s letter was expected as early as last night.
Hargreaves Lansdown analyst Susannah Streeter said: “This is the latest twist in the dramatic takeover saga, and comes just two days before it [Musk] was to be removed by Twitter lawyers, suggesting that “Team Musk” thinks the chances of the court ruling in his favor were slim.