Elon Musk has offered to buy Twitter for the initially agreed price of $44bn, in a move that could put an end to one of the highest-profile corporate legal battles in decades.
The Tesla chief sent a letter to Twitter on Monday night offering to go ahead with the deal, less than two weeks before the parties were set to go to trial in Delaware Chancery Court.
According to a regulatory filing on Tuesday, Musk’s lawyers said in the letter that the entrepreneur intended to close the deal at the previously agreed price of $54.20 a share, once debt financing was received, provided the court halted the legal action and adjourned the upcoming trial and related proceedings.
“The Musk parties provide this notice without admission of liability and without waiver of or prejudice to any of their rights,” the letter said.
In a statement, Twitter acknowledged that it had received the letter and said that the “intention of the company is to close the transaction at $54.20 per share”.
The parties met in court in an emergency hearing via Zoom early on Tuesday with the judge, Kathaleen McCormick, according to a person familiar with the situation.
Twitter is seeking broader protections from the court, the person said, such as an order to give guarantees on timing and certainty of closing. The sides are now hashing out what a mechanism might look like, the person said.
Another emergency court hearing in which both sides will update the judge is expected in the coming days, according to two people familiar with the matter.
A person close to Twitter said the company is concerned that Musk might be offering to proceed with the deal in an effort to delay a trial. Musk was due to be deposed later this week.
Musk tweeted on Tuesday: “Buying Twitter is an accelerant to creating X, the everything app.”
Shares in Twitter rose sharply after Bloomberg first reported that Musk proposed to proceed with the deal, before trading was halted. After trading resumed, Twitter shares closed 22 per cent higher at $52.
The Tesla chief executive initially agreed in April to take over Twitter for $54.20 a share. Just months later, in July, he said he intended to pull out of the deal, citing concerns that the company had misled regulators and investors over the number of fake accounts on its platform.
Twitter sued Musk to complete the deal, arguing that his attempt to back out was motivated by protecting his financial interests during a downturn in tech stocks rather than any valid concerns over account numbers.
A trial was set to begin on October 17. The parties have issued dozens of subpoenas to investors, bankers and others involved in the deal, and have accused each other of failing to co-operate in the pre-trial process.
Last month, Musk amended his complaint to include allegations from former Twitter executive Peiter Zatko that the company misled users and regulators about its security practices — claims that were only made public after Musk first announced his intention to pull out, and which the social media company denied.
His attempt to avoid a protracted legal battle — which has already resulted in the release of his private text messages with well-known tech figures — added another twist to a deal that has captivated the corporate world.
While most observers believed it would be near-impossible for Musk to back out of the watertight agreement, there was also curiosity as to whether he could get away with it and what that would mean for merger and acquisition contracts more broadly.
Historically, it has been extremely difficult for buyers who agree a deal to be allowed to abandon it unless there were extraordinary breaches of the merger agreement.
A coterie of Wall Street banks that have signed up to provide $13bn of financing will face a difficult path to unload the debt with the sell-off in the leveraged finance market and may have to fund the deal at least partially themselves.