Updated October 4, 2022 at 3:46 PM ET
Elon Musk now wants to go through with his original offer to buy Twitter for the previously agreed upon price.
The legal team for the billionaire Tesla CEO sent a letter to Twitter Monday, which could put an end to the knock-down, drag-out legal fight over the merger that he tried to abandon in July.
The news, first reported by Bloomberg, sent shares of the struggling social media company soaring before the Nasdaq halted trading for a few hours. Twitter stock ended the day up 22%.
Musk agreed in April to buy Twitter for $54.20 per share, or about $44 billion, but then tried to back out of the deal after the company's value sank, along with other tech stocks and the broader market.
Twitter sued to force Musk to abide by the deal. A trial is scheduled to begin in less than two weeks. It's now up to the company to accept Musk's renewed offer or force the billionaire to go to court in an effort to seal the deal.
In the letter, Musk's legal team makes clear that the offer is good only if Twitter drops its lawsuit. In a statement, a Twitter spokesperson gave little clue about which direction the company would take.
"We received the letter from the Musk parties which they have filed with the SEC. The intention of the Company is to close the transaction at $54.20 per share," they said.
The two sides are discussing how to drop the litigation, while guaranteeing that the deal will be completed, according to a person close to the talks.
A tumultuous courtship Twitter never sought
Musk and Twitter have been at odds almost since Musk first revealed his interest in the company in early April. In the course of just a few months, Musk went from being Twitter's largest individual shareholder to would-be board member to unsolicited bidder to unwilling buyer.
Twitter, which never put itself up for sale in the first place, found itself in the awkward position of trying to force Musk to buy it, even as it acknowledged the specter of his ownership was causing disruption to its already struggling business.
Along the way, Musk has used his Twitter account – which now boasts nearly 108 million followers – to mock the company, critique its products, attack its executives and keep the world guessing about what he'd do next.
The billionaire began buying Twitter shares in January. By spring, he'd become its biggest individual shareholder, but delayed notifying regulators or the public until early April. At that point, he told Twitter he saw three options: join its board, buy the company and take it private, or start a competing social network, according to Twitter's lawsuit.
After accepting and then reneging an invitation to join the company's board, Musk made an unsolicited offer to buy Twitter for $54.20 a share, or about $44 billion.
Twitter initially resisted, adopting a so-called "poison pill" to slow down Musk's advances and give the board and management time to evaluate his offer against other prospects. Musk started tweeting veiled references to making a tender offer directly to Twitter shareholders to get his way.
Finally, Twitter agreed to sell to Musk in late April. The company and Musk signed a deal in which Musk waived any further due diligence, pledged tens of billions of his own money, and promised not to use his Twitter megaphone to disparage the company. The deal included another important protection for Twitter: it said if Musk tried to back out, with few exceptions, the company could take him to court to force him to complete the purchase.
Musk's change-of-heart led to high-stakes legal battle, with trial scheduled for this month
The ink was barely dry on the agreement when Musk began suggesting he had cold feet. When he struck the deal, he said one of his goals in owning Twitter was to clean up its longstanding problems with spam and automated bot accounts. Soon, he began saying he didn't want to buy Twitter because of the bots – and accused the company of misleading him and the public about the scale of the problem. (Twitter has for years said it estimates about 5% of daily users are not real people.)
In early July, he announced he was terminating the deal, citing his concerns over Twitter's user numbers and his allegations that Twitter deceived him. Twitter hit back two days later with a lawsuit seeking to hold Musk to the terms of the sale.
Twitter accused Musk of suffering from buyer's remorse, noting that the stock market rout since the deal was signed made the price Musk had agreed to pay look high and dented the value of his Tesla stake – his primary source of wealth.
The company argued Musk's claims about bots were irrelevant to the question of whether he broke the legal agreement, which made no mention of how many accounts on Twitter aren't real.
Indeed, Musk amended his legal argument in August, after Twitter's former security chief filed a federal complaint contending Twitter was putting users' privacy and sensitive company information at risk through lax security practices. (Twitter has called the allegations inaccurate, inconsistent and opportunistic.)
Musk's reversal comes after an unusually eventful discovery phase of the case, in which attorneys for both sides filed more than a hundred subpoenas and took dozens of depositions.
Internal emails and texts were beginning to pour out of the case, including a cache of Musk's texts in which some of the richest, most powerful, boldface names in Silicon Valley begged to get in on the deal, handed out free advice and generally kissed up to him.
Musk is scheduled to sit for a deposition this week. A five-day trial is slated to begin Oct. 17.
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