Elon Musk proceeds with merger agreement with Twitter
October 15, 2022
A monthslong battle between business tycoon Elon Musk and Twitter Inc. eased after Musk resumed the deal to acquire the social media company.
The Tesla Inc. CEO agreed to the original agreement of purchasing Twitter for $54.20 per share, according to a letter sent out on Oct. 3.
The move to acquire Twitter started on April 4, when Musk purchased a 9.2% stake in Twitter, according to a filing to the Securities and Exchange Commission. The purchase is equivalent to 73,486,938 shares of Twitter common stock and has an estimated value of about $2.89 billion.
On April 5, Twitter entered into an agreement with Musk, offering him a seat with the company’s board of directors. The position would last until the company’s 2024 annual stockholders meeting, according to an SEC filing.
Musk proposed to acquire all of the outstanding common stock not owned by him in cash, valuing the purchase at $54.20 per share, according to an April 14 SEC filing.
The filing also reported that Musk, referred to as the “reporting person,” reserved the right to withdraw or modify the terms of the non-binding proposal. He saw great potential for Twitter and the United States since initiating his investment.
“However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form,” Musk wrote on April 13, as said in the filing. “Twitter needs to be transformed as a private company.”
If the proposed transactions are completed, Twitter would be delisted from the New York Stock Exchange.
Twitter accepted Musk’s offer, which is approximately worth $44 billion.
However, the deal was put on hold on May 13, as Musk tweeted that it was due to “pending details supporting the calculation that spam/fake accounts do indeed represent less than 5% of users.” Four days later, Musk tweeted that the deal could not move forward until Twitter CEO Parag Agrawal provided proof of this.
Twitter’s inability and resistance to provide the data and information requested by Musk delayed his acquisition of the social media platform.
“As Twitter’s prospective owner, Mr. Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing,” Mike Ringler, a lawyer representing Musk, wrote to Twitter’s legal team, according to a SEC filing from June 6.
Ringler added that Twitter’s noncompliance is a “clear material breach” of the company’s obligation under the merger agreement. The letter also asserted Musk’s rights to not consummate the transaction and to terminate the agreement.
As a response to Ringler’s letter and Musk’s attempt to back out of the agreement, Twitter sued Musk on July 12 to coerce the original merger agreement. Musk then sued Twitter back on July 28. A court date for the lawsuit against him was scheduled for Oct. 17.
The battle between the company and the tycoon subsided as Twitter shareholders voted to approve Elon Musk’s original $44 billion bid to buy the company, according to The Wall Street Journal. This was followed by Musk’s Oct. 3 letter.
The five-day trial on Oct. 17 for Twitter’s lawsuit against Musk is still set. However, Musk and his legal team believe it is in everyone’s best interest to drop the scheduled date to just focus on getting all the necessary documentation for the acquisition by Oct. 28, the new date ruled by a Delaware Chancery Court judge.