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In major reversal, Elon Musk again proposes buying Twitter at full price

<i>Susan Walsh/AP</i><br/>Twitter stock surges on reports Elon Musk
AP
Susan Walsh/AP
Twitter stock surges on reports Elon Musk

By Clare Duffy, CNN Business

Elon Musk on Monday sent a letter to Twitter proposing to follow through with his deal to buy the company at the originally agreed upon price of $54.20 per share, according to a securities filing on Tuesday.

In the letter, Musk said he would proceed with the acquisition on the original terms, pending receipt of the debt financing for the deal and provided that the Delaware Chancery Court stay the litigation proceedings over Musk’s initial attempt to pull out of the deal and adjourn the upcoming trial over the dispute.

A Twitter spokesperson said in a statement to CNN that the company received Musk’s letter and reiterated its previous statement that the “intention of the Company is to close the transaction at $54.20 per share.”

Musk on Tuesday night tweeted: “Buying Twitter is an accelerant to creating X, the everything app.”

News of the letter was first reported by Bloomberg earlier on Tuesday. Twitter stock was halted twice, the second time for news pending. After the stock resumed trading, it was up more than 20%, topping $51 a share and approaching the agreed upon deal price for the first time in months.

The news comes as the the two sides have been preparing to head to trial in two weeks over Musk’s attempt to terminate of the $44 billion acquisition agreement, which Twitter had sued him to complete. Twitter CEO Parag Agrawal had been set to be deposed by Musk’s lawyers on Monday, and Twitter’s lawyers had planned to depose Musk starting on Thursday.

It also follows the release on Friday of a trove of Musk’s personal text messages about the deal. The messages offered a look at the cast of Silicon Valley insiders and billionaires — from Larry Ellison to members of the Murdoch family — who contacted him to weigh in on and, in some cases, offer financing for the deal.

Such an agreement could bring to an end a contentious, months-long back and forth between Musk and Twitter that has caused massive uncertainty for employees, investors and users of one of the world’s most influential social media platforms.

The ball will now be in Twitter’s court to determine how to respond to Musk’s proposal. Twitter’s board will likely agree to move forward with closing the deal, according to Josh White, assistant professor of finance at Vanderbilt University.

“The very public saga has certainly taken a toll on them and Twitter employees,” White said. “It is best for all parties to finish the deal and make a quick and seamless transition. I suspect it will close quickly.”

However, Twitter may not want to hit pause on the litigation, per Musk’s proposal, until the deal is officially closed, according to Columbia Law School professor Eric Talley. The company may want to proceed with the litigation process as it negotiates with Musk, in case his offer to complete the deal falls through again.

“Twitter is probably going to say, ‘look, we definitely want to engage you on this … But we’ve still got a trial on Oct 17 and until this is signed, sealed and delivered, we’ve got to get ready for trial,” Talley said.

The saga began in April when Musk revealed he had become Twitter’s largest shareholder. Over the next several months, Musk accepted and then backed out of an offer to sit on Twitter’s board, threatened a hostile takeover of the company, signed an agreement to buy the company, started raising concerns about bots on the platform, attempted to terminate the agreement, was sued by Twitter to follow through with the deal and added claims from a Twitter whistleblower to his argument.

Musk initially moved to terminate the deal citing claims that the company has misstated the number of spam and fake bot accounts on the platform. Twitter claimed that Musk had breached the deal and was using bots as a pretext to exit a deal he’d gotten buyer’s remorse over after the broader market decline, which also hurt Tesla stock and, by extension, Musk’s personal wealth.

Throughout the back and forth, Twitter had maintained that it planned to follow through with deal at the price and terms originally agreed upon.

Many legal experts have said that Twitter has the stronger argument heading into court, and that Musk would a face a significant burden in trying to prove that the company had made materially misleading statements in its securities filings or in the deal contract.

The lawsuit was the final hurdle remaining in the way of the deal getting closed, after Twitter shareholders last month voted to approve the deal. The deal had originally been set to close this month.

With news that the deal could end up closing, attention may once again shift to what Musk’s control could mean for the social media platform.

Musk has previously suggested a series of potential changes to Twitter, the most significant of which could be returning former President Donald Trump to the platform and doing away with permanent account bans. Musk has also said he wants to make Twitter more open to “free speech” and could change its content moderation policies.

Twitter employees have also raised questions about what a Musk takeover could mean for benefits such as remote working and parental leave.

Twitter General Counsel Sean Edgett said in a message to employees Tuesday that the company had received Musk’s letter and planned to close the deal at $54.20 per share. “I will continue to keep you posted on significant updates, but in the meantime, thank you for your patience as we work through this on the legal side,” he said, according to a copy of the message obtained by CNN.

Blind, an anonymous private forum popular among Twitter employees, was abuzz on Tuesday amid reports about Musk’s reversal. Reaction on the forum was overwhelmingly negative, according to screenshots provided to CNN by a Twitter employee.

“Cue the layoffs,” one comment read. Several other employees expressed fear that Musk would roll back Twitter’s benefits package, including the severance offered to departing employees.

–CNN’s Donie O’Sullivan contributed to this report.

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