Tesla CEO Elon Musk has reversed course and is again proposing to buy Twitter for $54.20 a share after his legal team sensed the judge would not rule in their favor and potentially avoid avoiding a courtroom fight, Bloomberg reported, citing sources familiar with the matter. Shares of Twitter immediately jumped by as much as 15% after the news broke.
As we reported on August 10, Musk sold $7 billion worth of Tesla shares, citing the chance of a forced Twitter deal. Musk’s action to sell Tesla shares contradicted the statement he made just less than four months ago when he said on social media that he had “no further TSLA sales planned” after April 28.
Defending his decision to sell another share of Tesla, Musk said the funds could be potentially used to finance a potential Twitter deal if he loses a legal battle with the social media platform.
Musk is currently in the midst of a contentious legal battle with Twitter after backing out of the deal to acquire the social media giant in April for about $44 billion due to spam and bot issues.
On April 25, Twitter agreed to sell the company to Elon Musk for $44 billion. Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing the proposed transaction.
The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter. Musk needed to use his Tesla stock to raise $21 billion in equity to fund his takeover of the social media giant.
Shares of Tesla dropped about $9 after the news broke, but are still up more than 2% on the day.
Update 4:25 PM EST: In a long-awaited letter (SEC filing 13D) from his lawyers to Twitter’s lawyer at Simpson Thatcher, Musk finally confirmed his willingness to consummate the deal at its original stated terms, with just one caveat: the offer is pending receipt of debt financing proceeds (as well as the adjourning of the trial and all other proceedings).
“On October 3, 2022, the Reporting Person’s advisors sent a letter to Twitter (on the Reporting Person’s behalf) notifying Twitter that the Reporting Person intends to proceed to closing of the transaction contemplated by the April 25, 2022 Merger Agreement, on the terms and subject to the conditions set forth therein and pending receipt of the proceeds of the debt financing contemplated thereby, provided that the Delaware Chancery Court enter an immediate stay of the action, Twitter vs. Musk, et al. (C.A. No. 202-0613-KSJM), and adjourn the trial and all other proceedings related thereto pending such closing or further order of the court. The foregoing description of the letter is qualified in its entirety by reference to the full text of the letter, a copy of which is attached hereto as Exhibit S and incorporated herein by reference.”
