The world's richest man had sent a letter to the social media platform vowing to honour the original buyout price of $54.20 a share, prompting a surge in the stock price.
Elon Musk is abandoning his legal battle to back out of buying Twitter by offering to go through with his original $44 billion bid for the social media platform.
The mercurial Tesla CEO made the offer in a letter to Twitter, which the company disclosed in a filing Tuesday with the US Securities and Exchange Commission.
The offer comes just two weeks before Twitter's lawsuit seeking to force Musk to go through with the deal goes to trial in Delaware Chancery Court.
In a statement, Twitter said it intends to close the transaction at $54.20 per share after receiving the letter from Musk.
Musk’s proposal is the latest twist in a high-profile saga involving the world’s richest man and one of the most influential social media platforms. Much of the drama has played out on Twitter itself, with Musk — who has more than 100 million followers — lamenting that the company was failing to live up to its potential as a platform for free speech.
A letter from Musk’s lawyer dated Monday and disclosed by Twitter in a securities filing said Musk would close the merger signed in April provided that the Delaware Chancery Court “enter an immediate stay” of Twitter’s lawsuit against him and adjourn the trial scheduled to begin in two weeks.
READ MORE: Musk: Twitter deal should proceed if proof of real accounts are given
$1B breakup fee
By completing the deal, Musk essentially gave Twitter what it was seeking from the court — “specific performance” of the contract with Musk, meaning he would have to go through with the purchase at the original price. The contract Musk signed also has a $1 billion breakup fee.
Eric Talley, a law professor at Columbia University, said he’s not surprised by Musk’s turnaround, especially ahead of a scheduled deposition of Musk by Twitter attorneys starting Thursday that was “not going to be pleasant.”
“On the legal merits, his case didn’t look that strong,” Talley said.
“It kind of seemed like a pretty simple buyer’s remorse case.”
If Musk were to lose the trial, the judge could not only force him to close the deal but also impose interest payments that would have increased its cost, Talley said.
READ MORE: US judge: Musk can use Twitter whistleblower claims but can't delay lawsuit
What did surprise Talley is that Musk doesn’t appear to be trying to renegotiate the deal. Even a modest price reduction might have given Musk a “moral victory” and the ability to say he got something out of the protracted dispute, Talley said.
News of the renewed offer caused trading of Twitter stock to be halted for much of Tuesday afternoon on the New York Stock Exchange for “news pending” after it jumped nearly 13 percent to $47.93. That's still well below Musk's original offer. Trading halts are how stock exchanges give investors a forced timeout when trading for a stock gets too chaotic, or when a company is about to offer market-moving news.
Musk has been trying to back out of the deal for several months after signing on to buy the San Francisco company in April.
Shareholders have already approved the sale, and legal experts say Musk faced a huge challenge to defend against Twitter's lawsuit, which was filed in July.
Musk claimed that Twitter under-counted the number of fake accounts on its platform, and Twitter sued when Musk announced the deal was off.
Musk’s main argument for terminating the deal – that Twitter was misrepresenting how it measured its “spam bot” problem – also didn’t appear to be going well as Twitter had been working to pick apart Musk’s attempts to get third-party data scientists to bolster his concerns.
Twitter now has options in the case and doesn’t necessarily have to accept a new offer from Musk, said Robert Anderson, a law professor at Pepperdine University.
“Twitter could still be concerned that the same thing might happen again without some additional security,” Anderson said. “They’re going to want some assurance that the deal is going to happen right away."
READ MORE: Musk, Twitter's Agrawal reschedule questioning ahead of buyout trial