Elon Musk desires to purchase Twitter for $54.20 a share: A headline from April, sure, but additionally breaking information, with the on-again, off-again Silicon Valley saga looping again round on itself to finish up, on the eve of a courtroom showdown, precisely the place it began.
With a trial over the stalled merger set to start Oct. 17, the Tesla billionaire proposed Monday night to consummate his courtship of the social media platform on the authentic worth he agreed to pay in April.
A pointy downturn within the inventory market shortly made the $44-billion buy worth appear excessive, and it wasn’t lengthy earlier than Musk sought to again out, saying Twitter had too many bot accounts and was not clear in regards to the subject.
Though many Twitter staff had been leery of Musk, who overtly disparaged them as lazy activists, the corporate’s administration had little selection however to take him to courtroom or threat the wrath of its personal shareholders.
The most recent growth suggests Musk has come to agree with the numerous observers who noticed a Twitter victory as all however assured. “Shopping for Twitter is an accelerant to creating X, the all the things app,” he tweeted Tuesday.
However what modified his thoughts? Might he nonetheless see a means out of the deal? And what occurs subsequent for Twitter, both means?
Right here’s what we nonetheless don’t know.
Will the deal undergo?
After the occasions of the final six months, it might be exhausting to take Musk’s newest proposal at face worth.
Musk initially bought a stake in Twitter with out the required public disclosures, then agreed to hitch its board of administrators, solely to stroll away from that settlement to pursue the acquisition he would quickly be attempting to halt. He has publicly criticized Twitter’s executives, urged they misled him and traders in regards to the platform’s drawback with bots, or automated accounts, and mused that the service could also be dying.
Cautious of one other reversal, Twitter has reportedly requested the Delaware Courtroom of Chancery to superintend the closing.
Might Musk nonetheless discover a means out?
It’s conceivable. A letter from Musk’s legal professionals declared his intent to shut the deal as initially agreed to in April, “pending receipt of the proceeds of the debt financing.”
That phrase could possibly be important. Musk’s $44-billion supply included $13 billion of debt financing from banks, together with Morgan Stanley, Financial institution of America and Barclays. Underneath the phrases of the merger settlement, Musk might escape the deal by paying a $1-billion breakup charge if the financial institution financing falls by means of, mentioned Ann Lipton, a regulation professor at Tulane College.
However there’s a catch: That’s solely true so long as Musk will not be decided to have sabotaged the financing or influenced the banks himself, Lipton mentioned.
The banks might have their very own motives for preferring to see the deal fail. They’ve struggled to dump buyout debt to traders in current months and are dealing with large potential losses from the Twitter deal, in addition to many others.
Then again, the banks face each authorized obligations and reputational stress to observe by means of on their commitments, nonetheless costly. In the event that they bail, the chancery courtroom might require Musk to carry them to their lending commitments, even when that entails Musk suing them to finish the financing, Lipton mentioned.
The possibilities of a financial institution pullout “are fairly slim however not inconceivable,” mentioned Eric Talley, a professor at Columbia Regulation College.
Did dangerous publicity for Musk and his billionaire mates play a job?
It’s a theory. The invention part of the case had already yielded a trove of inner emails and textual content messages between Musk and different Silicon Valley whales and even, for some purpose, Joe Rogan.
A few of the texts have proven Musk showing unprepared or uninformed. Provided an introduction to crypto billionaire Sam Bankman-Fried, Musk didn’t appear to know who he was. In speaking to Twitter Chief Government Parag Agrawal, he wrote, “I kinda don’t assume I needs to be the boss of anybody.”
On the opposite aspect of the exchanges, Musk’s mates got here throughout in some circumstances as sycophantic, careless or each.
Oracle founder Larry Ellison and enterprise capitalist Marc Andreessen each supplied large sums of cash to again the cope with no obvious intention of performing any due diligence. Angel investor Jason Calacanis supplied himself up as a candidate for Twitter CEO — “Put me within the recreation coach!” he texted — and managed to harass Musk by attempting to boost outdoors funds for the deal with out Musk’s permission.
The messages additionally confirmed Musk’s deepening ties to the political proper. Joe Lonsdale, a conservative enterprise capitalist, texted Musk that Florida Gov. Ron DeSantis was in help of him.
Mathias Dopfner, CEO of media conglomerate Axel Springer, texted him: “Why don’t you purchase Twitter? We run it for you.” Dopfner as soon as requested executives at his firm to wish for Trump’s reelection.
Others reached out to easily have fun the information.
“You’re the hero Gotham wants – hell F’ing sure!” Riot Video games founder Marc Merrill texted to Musk.
“Are you going to liberate Twitter from the censorship glad mob?” Rogan texted him.
Musk was additionally attributable to be questioned underneath oath later this week.
What occurs to Twitter now?
Though the messages launched in discovery make clear Musk’s imaginative and prescient for Twitter as a free speech haven, his plans for the corporate are nonetheless unclear. In a gathering with staff in June, Musk mentioned he needed to succeed in 1 billion each day lively customers and make the corporate worthwhile.
To do that and pay down the debt he’s taking over on this deal, Musk has a tricky activity forward of him. Within the June assembly, Musk implied layoffs had been possible with the intention to convey down Twitter’s prices, which at present exceed income. A few of his allies have urged he lay off a big fraction of Twitter’s 8,000 staff.
Whether or not in anticipation of these cuts or of Twitter turning into one thing they might discover politically unpalatable, staff have already been leaving the corporate in droves, Enterprise Insider reported in August.
Instances employees writers Russ Mitchell and Michael Hiltzik contributed to this report.