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In what has been a tumultuous 6 months for Twitter, Elon Musk has announced a change of heart and will be proceeding with the planned takeover of the social media company.
The journey of the Twitter deal has been long and full of surprises all along the way. The entire ordeal began early in April 2022 when Elon Musk, the world's richest man, announced his 9% stake in the company which he had built from free market operations. CEO Parag Agarwal offered the billionaire a seat on the company's board, only for him to suggest buying out the company entirely.
A deal was finalized between the two parties late in April when Twitter was all set to be acquired by the SpaceX founder for an astronomical sum of $44 billion.
However, trouble began in May 2022 when Mr. Musk put the deal on a temporary hold to check the viability of Twitter's claim regarding fake accounts and bots. By June 2022, matters took a turn for the worse as Mr. Musk threatened to scrap the deal because Twitter was unwilling to share its data on spam accounts.
In July 2022, Mr. Musk inevitably backed out of the deal due to Twitter's alleged material breach of contract. Twitter's legal team sprung to claim the billionaire's withdrawal as 'invalid & wrongful' and sued him to force him to go through with the deal.
Moreover, a whistleblower from Twitter had accused Twitter of being “grossly negligent in several areas of information security”. A trial was all set to begin on October 17th in a Delaware Court. However, the tech mogul's intent to go through with this deal has triggered a sudden U-turn in the story.
The legal counsel of Elon Musk has confirmed in a court filing that the Tesla founder was willing to push ahead with the deal. Twitter has also confirmed that it received the letter which stated that the billionaire was willing to carry out the deal at the pre-decided price of $54.20 per share.
According to Mr. Musk himself, the acquisition of Twitter was an "accelerant to creating X, the everything app". He added that it would be easier to start X from scratch, but buying Twitter brought the X project forward by 3-5 years.
However, certain experts have suggested that Musk's chances of winning the trial were low, to begin with. So, instead of getting deposed and duking it out in a courtroom, a solution like this was better for Mr. Musk. Considering the fact that the deal's completion is dependent on the condition that the legal proceedings are paused, the aforesaid explanation seems to be the case.
Investors have felt relief as investor sentiment drove up the stock price yesterday. The stock opened at $42.81 per share but drove up to $52 per share as the announcement came during market hours.
The stock surged 22.24%, facing a temporary trading halt, as it crossed the $50 mark for the first time ever since it fell from the level in May this year.
Since 98.6% of Twitter's shareholders were in favor of the acquisition, the deal is expected to go forward and close in the coming weeks.
Article by Aman Agarwal.
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