Tech billionaire Elon Musk has reportedly proposed to proceed with his buyout of influential social media platform Twitter at a price of $54.20 per share. This was the same as his initial April offer.
*MUSK SAID TO PROPOSE TO TWITTER TO PROCEED W/ DEAL AT $54.20
— zerohedge (@zerohedge) October 4, 2022
Twitter shares spiked upon the surprising news and trading was halted.
*MUSK SAID TO PROPOSE TO TWITTER TO PROCEED W/ DEAL AT $54.20$TWTR shares just spiked and now are halted pic.twitter.com/cF6k1SfF1r
— Kailey Leinz (@kaileyleinz) October 4, 2022
Musk’s deal has come amid a contentious court battle that has forced Twitter to reveal the internal workings of the platform. Court documents released last week revealed numerous conversations by Musk over his reasons for making an initial buyout offer and his attempt to take a seat on the board.
Twitter shareholders in September voted to approve Elon Musk’s $44 billion bid to take over the social media platform.
Elon Musk had contested his proposed deal in court, due to credible reports that Twitter is misreporting the number of fake accounts or “bots” on the digital platform. Twitter continues to insist that only 5% of daily active users are ‘spam’ or ‘bots,’ a figure that has been contradicted by independent investigations that put the true number much higher.
Twitter subsequently sued Musk for alleged breach of agreement in the Delaware Court of Chancery. A court trial to resolve the dispute is expected to start in mid-October.
In September, a whistleblower, Peiter “Mudge” Zatko, a former security chief that was fired in January, testified before a Senate panel. Zatko was terminated after it was discovered that a number of foreign agents may have penetrated Twitter, which has massive security holes that could allow any engineer to access sensitive user data, including geo-location data.
Elon Musk’s legal team cited the whistleblower claims as among the reasons he is seeking termination of the deal. But apparently, Musk has reversed himself.
Musk announced in early June that he would abandon his Twitter offer after the company failed to provide satisfactory information about fake ‘bot’ accounts. Twitter sued the Tesla CEO to force him to uphold the deal.
In a letter to Twitter’s board, Musk’s lawyer Mike Ringler complained his client had sought data to determine how many “fake or spam” accounts are on the social media platform.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” the letter said.
Musk could be on solid legal ground to pull out of the deal if Twitter had attempted to defraud him during the takeover process.
“A reverse breakup fee paid from a buyer to a target applies when there is an outside reason a deal can’t close, such as regulatory intermediation or third-party financing concerns. A buyer can also walk if there’s fraud, assuming the discovery of incorrect information has a so-called ‘material adverse effect.’ A market dip, like the current sell-off that has caused Twitter to lose more than $9 billion in market cap, wouldn’t count as a valid reason for Musk to cut loose — breakup fee or no breakup fee — according to a senior Mergers and Acquisitions lawyer familiar with the matter,” CNBC reported.
As earlier reported, Twitter’s documents could help the billionaire entrepreneuer take over the social media giant for a lower asking price than previously offered. It may be the only hope for salvaging a platform that promises even more censorship of conservative voices ahead of the 2022 midterms.