The monthslong battle over Elon Musk’s bid to buy Twitter has been massive in scale and drama. One of the tech industry’s biggest deals in recent years, it has captured the public’s imagination, with cinematic twists that have been closely followed even by people who have never written a tweet.
Now Mr. Musk, in a surprise move, has added another plot turn. After months of trying to get out of a deal that he struck in April, the billionaire made a proposal on Monday night that could bring the acrimonious legal fight to an end.
Mr. Musk said he would do exactly what he said he would do in April: Acquire Twitter at $54.20 per share, according to regulatory filings made public on Tuesday.
Twitter, which sued Mr. Musk in July to force him to go through with the $44 billion deal, has yet to accept his new proposal and plans to add conditions to try to ensure that he doesn’t change his mind again.
In a short statement, Twitter said it had received Mr. Musk’s letter and reiterated the company’s intention to close the deal. Twitter may ask a court in Delaware, where it filed its suit, for protections that would force Mr. Musk to follow through with his new proposal, said three people familiar with the company’s plans, who were not authorized to speak publicly about them. The company could also demand that Mr. Musk pay interest on the deal price for the delays in completing the acquisition, one of those people added.
A deal would allow both sides to avoid a messy trial that was expected to start in two weeks in Delaware Chancery Court. The trial most likely would have featured testimony from Mr. Musk, who runs the electric automaker Tesla, and senior Twitter executives. Mr. Musk is scheduled to be deposed on Thursday and Friday in Austin, Texas, according to a legal filing.
Twitter has barely been profitable for most of its history and is dwarfed in size by other social media platforms like Facebook and the much younger TikTok. But the fight with Mr. Musk has preoccupied Silicon Valley, Wall Street and Washington because Twitter has for years been an online bullhorn for opinionated tech industry billionaires like Mr. Musk and politicians like former President Donald J. Trump, whom the company barred from its platform last year after the Jan. 6 riot on Capitol Hill.
If Mr. Musk does take over Twitter, one of his first big moves could be allowing Mr. Trump to return. Mr. Musk has said it was a “mistake” for Twitter to bar Mr. Trump.
The potential agreement follows months of disputes that have created existential challenges for Twitter, cratering its share price, demoralizing its employees and spooking the advertisers it relies on for revenue.
Mr. Musk, with his repeated, scathing criticism of Twitter and its management, has often seemed more interested in taking a wrecking ball to the company than becoming its new owner. His critics have argued that he has simply been looking for anything to justify backing out of a rash decision that he quickly came to regret.
What Happened to Elon Musk’s Twitter Deal
A blockbuster deal. In April, Elon Musk made an unsolicited bid worth more than $40 billion for the social network, saying he wanted to make Twitter a private company and allow people to speak more freely on the service.
“I think he recognized that litigation is not going well on his part,” said Ann Lipton, a professor of corporate governance at Tulane Law School.
A deal at the original price would be a victory for Twitter. Mr. Musk declared in July that he no longer intended to continue with the acquisition because he believed Twitter’s service was overrun by spam. Twitter sued him soon after.
Mr. Musk submitted his latest proposal to Twitter on Monday evening, informing the company that he intended to proceed with his original offer. “We write to notify you that the Musk parties intend to proceed to closing of the transaction,” a lawyer for Mr. Musk wrote in the letter, according to a regulatory filing. The letter asked that the court battle be paused, pending the closing of the deal.
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The two sides met in court in an emergency virtual hearing on Tuesday to discuss the proposal before Kathaleen McCormick, the judge overseeing the trial. The proposal was reported earlier by Bloomberg.
Lawyers for Mr. Musk and Twitter were expected to meet again in court later on Tuesday to discuss next steps, the person said. If they opt to proceed with the sale of Twitter, a deal could possibly close within weeks, or as soon as Mr. Musk hands over the $44 billion.
Twitter may request that Mr. Musk agree to have the court supervise the deal’s closing, three people familiar with the matter said. The company may also ask Mr. Musk to pay a daily interest fee for every day that has passed since shareholders approved the deal on Sept. 13, one of those people said.
“Procedurally, Twitter has done everything they need to do to close this deal,” said Brian J.M. Quinn, a professor at Boston College Law School. If the company accepts Mr. Musk’s proposal, it could request that the trial be postponed until the deal is completed, Mr. Quinn said. Once the acquisition is completed, Twitter will most likely dismiss its lawsuit against Mr. Musk.
On Tuesday evening, Mr. Musk tweeted that “buying Twitter is an accelerant to creating X, the everything app.” X is the name of holding company that Mr. Musk formed to buy Twitter.
Shares in the social media company spiked more than 12 percent on the news of Mr. Musk’s latest offer, before a halt in trading. Trading resumed in the afternoon, and Twitter’s share price closed at $52, a 22 percent increase.
The economic backdrop has changed significantly since Mr. Musk announced his intent to buy Twitter last spring. Amid inflation and geopolitical uncertainty, investors are facing the kinds of losses they haven’t seen since 2009. That has also made it more difficult to finance deals.
Investment banks, led by Morgan Stanley, have already agreed to help finance the deal with about $13 billion in debt. The banks remain on the hook until April, according to the terms of their contract.
Mr. Musk has said he would finance the rest of the deal in cash. In April, he sold about $8.5 billion shares in Tesla to help fund the deal; in May, he said he had lined up about $7 billion in cash from an array of investors including the venture capital firm Andreessen Horowitz and the tech mogul Larry Ellison. It was not immediately clear what commitments those investors had to Mr. Musk.
In August, Mr. Musk sold an additional $7 billion worth of Tesla’s stock in “the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t come through,” he wrote at the time.
Twitter employees learned of Mr. Musk’s proposal from media reports while participating in a companywide meeting about corporate plans for 2023 on Tuesday, reigniting confusion and speculation that have roiled Twitter’s work force over the past six months, four employees said.
Parag Agrawal, Twitter’s chief executive, did not immediately address Mr. Musk’s offer with employees, those people added. Sean Edgett, Twitter’s general counsel, said in an email to employees on Tuesday afternoon, “I will continue to keep you posted on significant updates, but in the meantime, thank you for your patience as we work through this on the legal side.”
On the internal Slack messaging system on Tuesday, employees discussed the implications for the company, their jobs and their stock compensation. In a channel with nearly 2,000 members that is used to joke about company news, some wondered what would happen if Twitter’s board did not accept Mr. Musk’s renewed offer. Some speculated that Twitter’s stock would plummet, while another, referring to Mr. Musk, said the company would not have to be owned by “a moron.”
While an agreement would signify an end to the uncertainty clouding Twitter’s immediate future, Mr. Musk’s plans for the company are not clear. He told investors before trying to back out of the deal that by 2025, he could get the company to 500 million daily users and revenue of $13.2 billion.
Twitter and Mr. Musk were set for a showdown this month in a Delaware courtroom. The company argued in legal filings that Mr. Musk’s reasons for abandoning the deal were smoke screens, and suggested that he had simply hoped for a lower price after stock market declines decreased his wealth.
Mr. Musk said Twitter had most likely undercounted the amount of spam on its platform, making the company less valuable than he initially believed. He also cited whistle-blower claims from a former Twitter executive, who said the company had misled regulators about its security practices, as a reason to exit the deal.
Ryan Mac contributed reporting.