Elon Musk to proceed with $44bn buyout of Twitter after U-turn

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Elon Musk has filed to complete his $44bn (?38bn) acquisition of Twitter after months of legal drama.

Lawyers for Musk confirmed in a court filing Tuesday that the billionaire will push ahead with the deal after performing anotherdramatic U-turn on his decision to walk away from the agreement.

The filing confirmed reports from Bloomberg on Tuesday that the Tesla chief executive had written to Twitter offering to close the deal at the original price of $54.20 a share, which sent shares in the social media site climbing more than 12% to $47.93 in New York before trading was halted.

Musk had been set for a courtroom showdown with Twitter on 17 October, with multiple legal commentators warning he had a slim chance of succeeding in his attempt to scrap the deal.

“We write to notify you that the Musk Parties intend 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,” reads the notice, filed by Musk’s lawyers with the Delaware Chancery court which was overseeing the trial.

Twitter agreed, writing: “The intention of the company is to close the transaction” that was agreed upon during the original deal.

The microblogging platform has been demanding that Musk, the world’s richest man, complete the deal under terms agreed in April. It is suing him in Delaware, the state where Twitter is incorporated and which has a strong legal reputation for enforcing merger agreements.

The Wall Street Journal reported on Tuesday that Musk had made the proposal to Twitter’s lawyers overnight on Monday and had filed a letter with the Delaware chancery court before an emergency hearing on the deal on Tuesday.

Anat Alon-Beck, a law professor at Case Western Reserve University in Ohio, said Musk appeared to be “finally listening to his lawyers”. Musk is due to be questioned under oath by Twitter lawyers on Thursday and Friday as part of preparations for the Delaware trial. “He will be a fool to not at least try to buy the company now and avoid [a deposition],” said Beck, claiming that Musk “has no defence on trial”.

Musk is countersuing Twitter with a lawsuit that will be heard at the same time as the social media site’s claim. His initial argument against buying the company was that it had miscounted the number of spam or bot accounts on its platform.

However, last month the Delaware judge hearing the case agreed to let Musk expand his lawsuit to include claims from a whistleblower, Peiter “Mudge” Zatko, who had been fired as Twitter’s head of security this year but had claimed the company was “grossly negligent in several areas of information security”.

Twitter denied it miscounted the number of spam accounts, or vexatious accounts not operated by human users, and said Zatko’s claims were “riddled with inconsistencies and inaccuracies and lack important context”.

Legal observers have said Musk’s chances of success are low, with neither the bot issue nor Zatko’s claims likely to meet the legal bar for constituting a “company material adverse effect”, which substantially alters the business’s value and therefore renders the deal invalid.

Twitter has also been scathing about Musk’s behaviour. In its lawsuit demanding he close the deal on the agreed terms, it said Musk’s behaviour was “a model of bad faith” and accused him of treating the sale process as an “elaborate joke”.

The relationship between Musk and the Twitter board deteriorated to the extent that the Tesla chief executive, who has nearly 108 million followers on Twitter, tweeted a poo emoji at the company’s chief executive, Parag Agrawal. The emoji was sent in response to a Twitter thread posted by Agrawal attempting to explain the company’s approach to spam account detection.

Musk’s tweet was included in Twitter’s lawsuit as an example of how he had broken the merger agreement in multiple ways. Under one clause, Musk was barred from sending tweets that “disparage” the company or its representatives.

Carl Tobias, the Williams chair in law at the University of Richmond, Virginia, said a number of factors had been working against Musk, including a lack of sufficient evidence of a material adverse effect and the fact he would be up against the “no-nonsense” Delaware judge Kathaleen McCormick.

He added: “Finally, Musk may have concluded that the litigation was too much of a distraction, and so unlikely to yield a favourable result for him that discretion was the better part of valour, despite Musk’s reputation for not settling cases.”