IThere is a surprising turnaround in the dispute over the takeover of Twitter: Elon Musk has offered to buy the online platform at the originally agreed price. According to a statement to the SEC, he has sent a letter to the company. After months of tug-of-war, Twitter would therefore not have to make any concessions in the end. Musk’s change of heart comes less than two weeks before a court case between him and Twitter was due to begin, and Musk’s affidavit was scheduled for later this week. The showdown in court is now likely to be canceled.
Twitter stock was suspended from trading on Tuesday afternoon. The company initially gave no comment. As the Washington Post wrote, it wants to take at least one day to respond. There is a lot of suspicion on both sides, and Twitter leaders wonder if the letter could be a “legal maneuver”.
Musk’s concerns about “spam” or “fake” accounts
Musk and Twitter agreed in April on a price of $44 billion, or $54.20. But the CEO of the electric car manufacturer Tesla raised doubts about the transaction after just a few weeks. In July, he declared the takeover overturned and accused Twitter of violating clauses in the purchase agreement. He cited his concerns about “spam” or “fake” accounts on Twitter that aren’t actually owned by real users. Twitter says their share of published user numbers is less than 5 percent, Musk claims it could be significantly more.
Twitter immediately sued Musk after announcing his withdrawal, accusing him of breach of contract. The company described this as a subterfuge and accused Musk of seeking an “escape route.” He wanted out of the contract because the environment on the capital markets had clouded over and the value of his stake in Tesla and thus his assets had shrunk significantly. Musk filed a counterclaim a little later, accusing Twitter of fraud.
Right from the start, legal experts gave Musk only a slim chance of being able to have the agreed takeover burst through legal channels. “He would have to pull a rabbit out of the hat in the legal dispute,” said Ann Lipton from Tulane University in New Orleans to the FAZ. However, it was considered conceivable that the two sides would agree on a settlement. So it’s all the more remarkable that Musk now appears ready to complete the acquisition on the original terms.
The Twitter saga began when Musk announced in early April that he had bought a 9.2 percent stake in the company. This made him one of the largest shareholders from the start. The purchase contract was signed a few weeks later. Musk has described his takeover as a kind of free speech campaign. He accused Twitter of excessive censorship of content and suggested that this would change under him. He has also said he would lift former US President Donald Trump’s current Twitter ban.
Tesla shares sold for more than $15 billion
Musk wants to raise a total of 33.5 billion in equity to finance the acquisition. He himself has sold Tesla stock for more than $15 billion this year. However, a significant part of the equity should come from other financiers, who would then become Twitter shareholders. Among other things, Larry Ellison, the co-founder of the software company Oracle, has pledged one billion dollars. In addition to the equity, a loan of 13 billion dollars is also planned, for which Twitter itself is said to be responsible.
Should Musk actually take over Twitter, he will become the owner of a company in deep trouble. For years, Twitter has been accused of not exploiting its economic potential, and recently the economic environment has clouded over considerably. For the most recent fiscal quarter, the company reported a decline in sales. Among other things, the uncertainty surrounding the sale to Musk was blamed for this.
If the two sides actually come to an agreement, the takeover could probably be completed very quickly. Twitter shareholders have approved the sale to Musk.