Musk revives $44 billion Twitter bid, aims to avoid lawsuit

(Bloomberg) — Elon Musk revived his bid for Twitter Inc. at the original offering price of $54.20 per share, potentially avoiding a courtroom battle over one of the most contentious acquisitions in recent history.

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Musk made the proposal in a letter to Twitter, according to people familiar with the matter, who asked not to be identified and discussed confidential information. Shares in Twitter rose as much as 18% on the news and trading has since been halted. Musk and representatives of San Francisco-based Twitter did not respond to requests for comment on the letter or whether the company would accept the proposal.

For Twitter, continuing with Musk’s original terms spells a future under a mercurial billionaire who has spent months publicly criticizing its leadership, questioning its value and changing its mind. It also means that his contested claims — that Twitter lied about what percentage of users were bots, for example — likely won’t be examined in a courtroom.

Musk had been trying for months to back out of his contract to acquire Twitter, which was signed in April. The billionaire began showing signs of buyer’s remorse shortly after the deal was announced, claiming Twitter had misled him about the size of its user base and the prevalence of automated accounts known as bots.

Musk formally walked away from the deal in July, and Twitter sued him in Delaware Chancery Court to force him to go ahead with the purchase. A trial is scheduled to begin on October 17. The Delaware judge on Tuesday asked both sides to return to her with a proposal for how the case can now proceed. Possibilities include Twitter seeking to dismiss the suit or having her continue to retain jurisdiction until the deal closes, a person familiar with the matter said.

In the weeks-long run-up to the Delaware showdown, lawyers from both sides have fired barrages of subpoenas at each other aimed at teasing testimony and evidence. Musk’s side had to demonstrate that Twitter violated the terms of the agreement. Twitter alleged that Musk used the bots issue as a pretext to back a deal he no longer found financially sound.

Musk’s legal team got a feeling the case wasn’t going well when Judge Kathaleen St. J. McCormick repeatedly went on Twitter in prior rulings, according to a person familiar with the matter. Even with the late emergence of a Twitter whistleblower who alleged executives were absent on security and bot issues, there were concerns that Musk’s side would not be able to prove a significant adverse impact, the legal standard required to leave the contract.

Inside Twitter on Tuesday, many employees were sitting through 2023 planning presentations when the news first began circulating, according to multiple sources. The presenters did not acknowledge the news, which the staff then spread on their own social networks. Many employees have resisted the idea of ​​working for Musk, who has been openly mocked and criticized on internal Slack channels since the deal was signed.

Twitter shareholders voted on September 13 to accept the takeover offer as Musk submitted it. The company said at the time that 98.6% of the votes cast were in favor of the deal. Musk, Twitter’s largest shareholder, did not vote at all, according to two people familiar with his decision. Musk owned nearly 10% of Twitter — more than 73 million shares — when he agreed to buy the company.

Musk was scheduled to answer questions about the deal in Austin, Texas, on June 6-7. October, according to a court filing Tuesday. Twitter CEO Parag Agrawal was scheduled to sit down for his ouster on Monday.

The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).

(Updates with details from the judge’s request in the fifth paragraph.)

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