Oct 4 (Reuters) - Billionaire Elon Musk is proposing to
proceed with his original $44 billion bid to take Twitter Inc
private, security filings showed on Tuesday, calling
for an end to a lawsuit by the social media company that could
have forced him to pay up, whether he wanted to or not.
An agreement would put the world's richest person in charge
of one of the most influential media platforms and end months of
litigation that damaged Twitter's brand and fed Musk's
reputation for erratic behavior.
Musk, the chief executive of electric car maker Tesla Inc
, will take over a company he originally committed to
buying in April, but soon soured on. Late on Tuesday he tweeted
that buying Twitter would speed up his ambition to create an
"everything app" called X.
The renewed offer comes ahead of a highly anticipated
face-off between Musk and Twitter in Delaware's Court of
Chancery on Oct. 17, in which the social media company was set
to seek an order directing Musk to close the deal for $44
Musk sent Twitter a letter on Monday that said he intended
to proceed with the deal on the original terms if the Delaware
judge stayed the proceedings. A source familiar with Twitter's
team told Reuters that at a court hearing on Tuesday morning the
judge requested the two sides report back in the evening.
It was not immediately clear why Musk chose to abandon his
fight, although some pointed to his scheduled deposition.
"He was about to get deposed and a lot of uncomfortable
facts were going to come out," said Eric Talley, a professor at
Columbia Law School.
Twitter received Musk's letter and intended to close the
deal at the original price, a spokesperson told Reuters. Twitter
did not say whether it accepted Musk's offer.
Musk, one of Twitter's most prominent users, said in July he
could walk away without penalty because the number of bot
accounts was much higher than Twitter's estimate of less than 5%
of users. Bots are automated accounts, and their use can lead to
overestimations of how many humans are on the service, which is
important for advertising rates and the overall value of the
Twitter's legal team on Sept. 27 said that scientists
employed by Musk estimated the number of fake accounts on the
platform at 5.3% and 11%.
"None of these analyzes so far as we can tell remotely
supported what Mr. Musk told Twitter and told the world,"
Twitter lawyer Bradley Wilson told the court.
The original deal was "a very seller-friendly agreement that
would be very difficult to get out of," said Adam Badawi, a law
professor at UC Berkeley. Musk realized, he said, "in all
likelihood it was going to result in forcing him to close at
$54.20 a share."
Musk was relatively quiet on Twitter during the day, but
late on Tuesday he tweeted that "Twitter probably accelerates X
by 3 to 5 years."
That echoed suggestions he made to Twitter staff in June
about creating a "super app" or marketplace for different apps
and features like WeChat, which is popular in China. Musk also
has said he wants to create a money transfer feature.
A settlement between the two sides would revive fears among
Twitter's users about Musk's plans for the platform, which has
removed prominent politically conservative voices. Supporters of
Donald Trump hope that Musk will reactivate the account of the
former U.S. president, who was banned after the Jan. 6, 2021,
attack on the U.S. Capitol by his supporters.
Musk has used Twitter to stir controversy, including on
Monday when he floated a peace plan for the Ukraine-Russia war
that drew swift condemnation from Ukraine's president, Volodymyr
Bloomberg was the first to report Musk was willing to pay
the original price. Musk also said his offer was contingent on
stopping the legal proceedings.
A settlement at the original price would also allow Musk to
finance the transaction without any complications. If Musk and
Twitter had renegotiated the price, it would have technically
allowed committed backers to walk away.
Musk has already sold $15.4 billion worth of Tesla shares
since agreeing to buy Twitter.
Musk has also secured a financing commitment from banks -
including Morgan Stanley, Bank of America Corp,
Mitsubishi UFJ Financial Group Inc and Barclays Plc
- to provide a $12.5 billion margin loan to support his
The banks that agreed to finance the acquisition are likely
to lose hundreds of millions of dollars on the deal because they
would struggle to attract investors to buy the debt, given the
downturn in markets since the deal was signed.
However, the banks agreed to provide the financing
irrespective of whether they can sell the loans and face long
legal odds freeing themselves from the financing commitment,
according to regulatory filings.
Since Twitter has already received shareholder support for
the sale to Musk, the deal could close quickly in the coming
weeks if the two sides were to settle on the original terms.
(Reporting by Nivedita Balu in Bengaluru, Tom Hals in
Wilmington, Del., Katie Paul in Palo Alto, Calif., and Anirban
Sen in New York
Additional reporting by Hyunjoo Jin and Krystal Hu in San
Francisco, Diane Bartz in Washington, Sheila Dang in Dallas, and
Chibuike Oguh in New York
Editing by Arun Koyyur, Kenneth Li, Peter Henderson and Matthew