Musk now wants to close $US44bn Twitter deal

An agreement would allow the social-media company and the billionaire to avert a high-stakes trial that was set to start soon.

Billionaire Musk has now changed his mind about Twitter, reviving his original offer. Picture: Olivier Douliery/AFP

Elon Musk has offered to close his acquisition of Twitter on the terms he originally agreed to, according to a person familiar with the matter.

The sudden and unexpected comedown for the billionaire entrepreneur could end a months-long battle he has waged to get out of the $US44bn deal.

Mr Musk’s lawyers communicated the proposal to Twitter’s lawyers and filed a letter confidentially with the Delaware Chancery Court ahead of an emergency hearing on the matter, the person said.

The two sides are discussing how to ensure the deal can be closed.

The judge overseeing the case requested they come back to her with a potential plan that would allow the litigation to be dropped, the person said.

Should the parties agree, the proposal would enable them to avert a high-stakes trial set to begin soon and represent a major victory for the social-media company.

There are no guarantees they will reach a deal – or that the unpredictable Mr Musk will follow through with his proposal and close the transaction.

The five-day trial, set to begin on October 17, could still go forward as planned.

Mr Musk was set to be deposed later this week as part of the preparations for the trial.

Lawyers for Twitter and Musk were drawing up battlelines for an upcoming fight when he suddenly changed his mind. Picture: Dimitrios Kambouris/Getty Images

Shares in Twitter resumed trading after an earlier halt and were more than 22 per cent higher near the US close to $US52.

That brings them closer to the $54.20 per share price Mr Musk agreed to pay when the deal was sealed in April.

Bloomberg earlier reported on Mr Musk’s proposal.

Twitter sued Mr Musk to follow through with his agreement to buy the company after he tried to back out of the deal in July.

He accused Twitter of fraud, saying the company misrepresented the condition of its business, including the number of bots on its platform.

Twitter countered that he was looking for a way out after the share price dropped along with the rest of the market.

It couldn’t immediately be learned what prompted Mr Musk to abandon his battle with the company.

Chancellor Kathaleen McCormick, who is overseeing the case, has at times appeared impatient with Mr Musk’s lawyers at hearings and has called his data requests “absurdly broad.”

It is possible he rated his odds of succeeding at trial as too low.

Mr Musk had sought to amend his case to incorporate complaints from a former head of security at Twitter who came forward as a whistleblower in August, alleging problems with the platform’s data security and in other areas.

The court allowed it, but there are no indications it would meaningfully strengthen Mr Musk’s case.

Twitter has been adamant that Mr Musk was obligated to close the deal on its original terms, and legal experts from the beginning expected the company would prevail at trial.

Mr Musk had the challenging task of proving that Twitter misled him to such an extent that the value of the company is drastically below what he agreed to pay for it.

Still, even the small risk of Mr Musk prevailing would weigh heavily on a public company like Twitter, and many analysts and investors expected the two sides to strike a settlement agreement ahead of or during the trial.

The majority of such cases do, often with a slight price cut. But it is exceedingly unusual for a buyer to offer to close a deal on its original terms ahead of such a trial.

Mr Musk has eschewed typical deal-making norms from the beginning.

He made a single best-and-final offer, avoiding the typical back-and-forth of corporate acquisitions, arguing that civilisation was at stake.

He originally took Wall Street and Silicon Valley by surprise when he revealed he owned a big stake in Twitter and agreed to join its board before quickly backing out.

He followed that up by making his offer without a clear way to pay for it, then caught Twitter off-guard again by unveiling a $US46.5bn financing package a week later.

He agreed to skip due diligence, the deep-dive into a company’s health that most buyers insist on.

That could have given him more insight into the prevalence of bots on the platform, an issue that has since appeared to consume him.

In the final merger agreement, he gave Twitter the right to sue him to follow through with the deal should he attempt to back out of it.

All the while, he taunted Twitter and its executives on its own platform, criticising the business and posting cryptic tweets suggesting he could take his offer directly to shareholders in the form of a tender offer should the company not accept his proposal.

One of the earliest signs of the unpredictable billionaire getting cold feet appeared in mid-May, when he tweeted that the deal was “temporarily on hold” because of concerns about fake accounts.

He followed up the early morning tweet a few hours later by saying he was still committed to the acquisition.

On July 9, he officially sought to terminate the deal.

– The Wall Street Journal