Elon Musk and Twitter tussle over the acquisition of the social media platform took a new turn on Monday evening, after the Tesla CEO said he would proceed with the deal at the original price of $54.20, potentially avoiding going into a legal battle.
The new deal proposed by Musk, which was first reported by Bloomberg, would allow him to honor the original agreement it had with Twitter in April, according to people familiar with the development who spoke in anonymity. In a tweet on Tuesday evening, he said buying Twitter is an accelerant to creating X, the everything app – a hint that he is proceeding with the deal.
Buying Twitter is an accelerant to creating X, the everything app
— Elon Musk (@elonmusk) October 4, 2022
Musk made a $44 billion proposal for Twitter acquisition in April, shortly after taking the highest stake in the company. But in July, the world’s richest man informed Twitter that he would no longer close the deal, citing an inaccurate number of users due to spam bots.
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Musk’s decision to call off the deal has resulted in months of dispute between him and Twitter. As its final resort to make Musk complete the deal, Twitter had sued him.
Musk, who is counting on whistle-blower claims from a former Twitter executive to back up his own claims, is believed to have attempted to pull out of the deal in a bid to get a cheaper price. The whistle-blower said that Twitter had misled regulators about its security practices.
Musk said that spam accounts make up more than 5% of Twitter users that the company had given in response to his request for the number of accurate users on the platform. He said it makes the company less valuable than he had initially believed.
While the proposal made by Musk on Tuesday evening is likely going to end the dispute and take pressure off both Twitter and Tesla that have had their stock impacted by the stalling deal, it’s not clear if Twitter will go by it.
Musk appears to be avoiding a potential legal outcome that will be determined by the court if the case proceeds. He is scheduled to be deposed on Thursday and Friday in Austin, Texas, according to a legal filing. But if Twitter accepts his proposal, it may ask for court supervision for the deal to ensure that Musk doesn’t back out of his offer once again.
Twitter’s stock skyrocketed on Tuesday afternoon following the news of the proposal, rising as much as 18% before trading was halted.
Wedbush analyst Daniel Ives said Musk’s decision to stick with the original agreement and complete the deal “is a clear sign” that the billionaire recognized he was “highly unlikely” to win his legal battle with Twitter’s board.
“We see minimal regulatory risk in this deal although now Musk owning the Twitter platform will cause a firestorm of worries and questions looking ahead among users and the Beltway,” Ives said in a note. “This is a smart move for Musk to go ahead with the deal given the legal hurdles that were ahead into Delaware.”
Musk had in the beginning, promised to take Twitter private and make it more profitable. He told investors before he changed his mind on the deal, that by 2025, he could move the company to 500 million daily users, generating $13.2 billion in revenue.