The case with file number 22-0613 would have been a thriller. Hearings before a court in the US state of Delaware were scheduled to begin on October 17. On the one hand: Elon Musk, the richest person in the world. On the other: Twitter, a platform used by millions of people. Lawyers and judges prepared for one of the largest and most expensive lawsuits in recent US history. But now, after months of back-and-forth, Musk appears to be avoiding litigation.
Musk said in a statement to the US Securities and Exchange Commission on Tuesday that he wanted to buy Twitter after all. For $54.20 per share, as originally planned. The deal is worth around $44 billion. It's a spectacular turnaround. Musk had signed a contract to take over the platform in April - and canceled it again in July. Twitter then sued the entrepreneur and wanted to enforce the agreement in court. That shouldn't be necessary anymore.
A new era could dawn for Twitter. Musk repeatedly complains that America's tech companies are too leftist and that Silicon Valley is suppressing conservative voices. Twitter, the billionaire often said, should therefore become a "hoard of freedom of expression". Musk even planned to bring back Donald Trump, who the platform banned in January 2021 after the Capitol storm. But the ex-president has so far refused.
Musk is an entrepreneurial genius, a man who revolutionized the auto industry with Tesla and space travel with SpaceX. The Twitter deal now appears as his attempt to gain political influence as well.
But why did Musk withdraw his purchase offer back then? He initially claimed that Twitter downplayed the number of fake profiles, which could hurt the advertising business. In August, he brought up allegations by whistleblower Peiter Zatko. The IT expert accused Twitter of sloppy handling of user data and described the platform as a "ticking bomb of security vulnerabilities". Zatko once worked as Twitter's head of security. He was fired in January and later filed a complaint with the SEC.
But was Musk really about fake profiles and security vulnerabilities? At the time, analysts tended to believe that the billionaire was looking for excuses to get out of a deal that no longer made economic sense to him. Because in the weeks after Musk's first offer, the shares of the big American tech companies lost significantly in value. Twitter fell below $33 at times - well below the $54.20 Musk had bid.
Why Musk is now sticking to the deal, why he is deciding to exit from the exit, he did not say at first. One reason could be that the entrepreneur considers success in court to be unlikely. American lawyers say he could hardly have convinced the judges that the termination of the purchase contract was justified. According to the experts, the alleged fake profiles and the accusations of the whistleblower were not enough.
"Legally, Musk probably didn't have a very good hand," says Eric Talley, a law professor at Columbia University in New York. It is therefore not surprising that the billionaire now prefers to avoid the process. "I'm just surprised," Talley said, "that Musk doesn't seem to be trying to renegotiate the deal." Even a modest price reduction could have given him a "moral victory."
Dan Ives, analyst at the American investment firm Wedbush, sees it similarly. He wrote in a note to investors that Musk's recent reversal shows that he has realized how slim his chances of winning the lawsuit are. Implementing the agreement after all and not letting it turn into a long, tough process will save Musk “a lot of headaches”.
Twitter said it plans to complete the transaction at $54.20 per share. Following initial reports of Musk's change of heart, trading in the company's shares on the New York Stock Exchange was temporarily suspended on Tuesday. When Musk confirmed the deal and trading resumed, the price jumped nearly 22 percent to $51.80. This means that Twitter is worth almost as much as it used to be.