Home Cartoonist Musk offers to move forward with deal to buy Twitter

Musk offers to move forward with deal to buy Twitter


Trading in Twitter shares was halted after the stock rose following reports that Elon Musk would press ahead with his $44 billion deal to buy the company after months of legal battles.

For the second time, Musk offered to buy the San Francisco company at $54.20. Shares jumped nearly 13% to $47.95 before trading halted.

Bloomberg News reported on Tuesday that Musk made the proposal in a letter to Twitter, according to people familiar with the matter who have not been identified.

Musk has been trying to walk away from the deal for several months after signing on to buy the social media platform in April. Shareholders have already approved the sale. Musk claimed Twitter had underestimated the number of fake accounts on its platform, and Twitter took legal action when Musk announced the deal was off.

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Neither Twitter nor Musk’s attorneys responded to messages seeking comment on Tuesday.

The trial to coerce Musk into buying Twitter is set to begin in Delaware Chancery Court on October 17.

Much of Musk’s argument for backing out of the deal rests on the allegation that Twitter has misrepresented how it measures the extent of “spam bot” accounts that are useless to advertisers. But most legal experts believed he faced an uphill battle to convince Chancellor Kathaleen St. Jude McCormick, the court’s chief justice, that something had changed since the April merger deal that justified the termination. of the agreement.

Legal experts have generally said Twitter has the upper hand in the lawsuit, which Twitter filed in July. Twitter is looking for “specific performance” of the contract with Musk, meaning it should make the purchase at the original price. The contract signed by Musk also includes a $1 billion severance fee.

“It’s a clear sign that Musk acknowledged going to court in Delaware that the odds of winning against Twitter’s board were highly unlikely,” Wedbush analyst Dan Ives wrote in a note. to investors. “Being forced to close 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 avoid a huge headache. legal head.”

Among the remedies that would favor Twitter is a court order to complete the deal. Last year, the chancery court forced private equity firm Kohlberg & Co. to buy out DecoPac, a Minnesota-based company that bills itself as the world’s largest supplier of decorating supplies, for $550 million. of cakes to professional decorators and bakeries. The case was emblematic of the court’s common – though not uniform – decision to impose contractual obligations on buyers.

Among other options, Musk is obligated to pay severance fees agreed to by each party if he is found to be at fault for the deal breaking down. Or he may have to pay a larger amount without buying the company for $44 billion.

Legal experts say Delaware courts have been picky about interpreting what counts as a good reason to back out of a deal. The gap between what Musk knew about Twitter when he made the offer in April and the state of the business today must have been huge, and there’s little evidence of that, a lawyer said.

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