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Musk Changes His Mind to Proceed With $44B Twitter Purchase

October 5, 2022 by Tom Ramstack
Musk Changes His Mind to Proceed With $44B Twitter Purchase
The symbol for Twitter appears above a trading post on the floor of the New York Stock Exchange, Tuesday, Oct. 4, 2022. (AP Photo/Seth Wenig)

WILMINGTON, Del. — Elon Musk reversed course Tuesday by saying he plans to proceed with his original $44 billion deal to buy social media giant Twitter Inc.

Musk notified the Securities and Exchange Commission of his change of plan in a filing with the agency.

The SpaceX and Tesla, Inc. founder also appeared to be heading off a lawsuit scheduled for trial Oct. 17 in which Twitter sought to compel him to abide by the earlier agreement.

Reports of Musk’s SEC filing prompted Twitter’s stock value to shoot up 15% in seven minutes Tuesday. The New York Stock Exchange temporarily shut down all trading of the stock for a cooling off period.

Twitter (NYSE: TWTR) was trading at $39 a share before Musk announced his interest in buying the company.

On Tuesday, Twitter released a statement saying, “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.”

Musk is listed in some valuations as the wealthiest man in the world with a net worth estimated at $273.5 billion.

Musk first announced his plan to buy Twitter in April but backed out of the deal on July 8 when he said he found the social media company failed to disclose key facts about its operations.

He accused Twitter of concealing internet security issues that could leave it vulnerable to attacks by hackers and lawsuits by users of the platform. He also said 5% of Twitter’s daily active users were spam accounts.

He accused the company of failing to properly describe its finances in reports to shareholders.

Musk had sought court-ordered sanctions against Twitter for allegedly trying to destroy records of its internet security lapses. Some of the lapses were revealed during a congressional hearing last month by Twitter’s former security chief, Peiter “Mudge” Zatko.

He said Twitter’s top executives sacrificed privacy of its users and national security to maximize their profits. The lapses included hiring a Chinese spy and granting thousands of employees access to users’ accounts.

Several lawmakers pledged tighter regulatory control of Twitter’s business operations and internet security procedures.

Twitter filed a lawsuit July 12 in Delaware Court of Chancery seeking a court order to force Musk to complete the corporate purchase. The lawsuit claimed Musk breached a binding legal agreement.

“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the lawsuit says. “This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business.”

Musk’s acquisition of Twitter is likely to mean the social media company’s most famous tweeter will return to sending messages.

Former President Donald Trump had about 90 million followers of his tweets before Twitter banned him for inciting the Jan. 6, 2021, insurrection at the Capitol.

Twitter officials explained that the lifetime ban was “due to the risk of further incitement of violence.”

Musk said at a business conference in May that he would reverse the ban if he acquired Twitter.

“I do think it was not correct to ban Donald Trump; I think that was a mistake,” Musk said.

Twitter’s lawsuit was filed as Twitter Inc. v. Musk et al. in the Court of Chancery of the State of Delaware.

Tom can be reached at tom@thewellnews.com and @TomRamstack

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