U-turn for Elon Musk as Tesla boss agrees £38bn Twitter takeover

Elon Musk agrees £38bn Twitter takeover: Billionaire’s U-turn averts a courtroom showdown

Elon Musk last night agreed to buy Twitter for £38billion just months after declaring the deal was off.

In a U-turn that stunned Wall Street and the City, the billionaire asked the social media giant’s board to proceed as planned with his $54.20 per share offer.

And in a statement, Twitter said it intended ‘to close the transaction’ at that price.

U-turn: Elon Musk has asked social media giant Twitter's board to proceed as planned with his $54.20 per share offer

U-turn: Elon Musk has asked social media giant Twitter’s board to proceed as planned with his $54.20 per share offer

Twitter shares surged 22 per cent to more than $52 but electric car maker Tesla gave up early gains on fears the deal will prove a distraction for boss Musk.

The move came just two weeks before a courtroom showdown between Musk and Twitter was due to begin in one of the most high-profile legal battles in US corporate history.

The two sides were going to face off in a Delaware court on October 17 when Twitter was set to seek an order directing Musk to close the deal at $54.20 a share or £38billion. 

Industry experts suggested Musk may have revived the deal to bring to an end proceedings he was unlikely to win.

Wedbush analyst Daniel Ives said the fresh takeover proposal was a ‘clear sign’ Musk recognised his efforts to walk away from the deal were ‘highly unlikely’ to succeed.

‘Being forced to do the deal after a long and ugly court battle in Delaware was not an ideal scenario and instead accepting this path and moving forward with the deal will save a massive legal headache,’ he said.

The battle for Twitter erupted in April when Musk revealed he had snapped up around a tenth of the company, making him the biggest shareholder. 

The 51-year-old snubbed an offer to join Twitter’s board and within weeks launched his £38billion swoop on the blogging site.

Twitter initially sought to fend off the tycoon’s advances, adopting a so-called ‘poison pill’ defence. 

But within the month its board, led by chief executive Parag Agrawal and chairman Bret Taylor, recommended shareholders accept Musk’s offer.

But the deal was thrown into doubt when the South African said he was putting his bid ‘on hold’ in a dispute over the number of ‘bots’, or fake accounts, on the site. 

Will he sell Tesla shares to fund deal? 

The resumption of Elon Musk’s Twitter takeover will throw a fresh spotlight on the finances of the world’s richest man – in a year that has already seen more than £42billion wiped off his fortune.

Musk and Twitter say they want to close the deal at the previously-agreed price, which should mean it can proceed without further complications.

Musk has already sold £13.4billion shares in his electric car company Tesla since agreeing to buy Twitter and says he does not plan to sell any more of his stake. But some analysts think he will do so in order to fund the Twitter deal.

Tesla founder Musk has already sold £13.4bn shares in his electric car company Tesla since agreeing to buy Twitter

Tesla founder Musk has already sold £13.4bn shares in his electric car company Tesla since agreeing to buy Twitter

Musk is the world’s richest man with a fortune of £194billion according to the Bloomberg Billionaires Index. 

But that fortune has fallen by £42billion since the start of the year – more than the £38billion he is paying for Twitter.

The deal could also revive fears among Twitter users about Musk’s plans for the platform, which has removed conservative voices.

Fans of former US president Donald Trump hope that Musk will reactivate his account, which was shut down after the January 2021 attack on the US Capitol by Trump supporters.

Musk is an outspoken user of the platform, most recently stirring controversy with a plan for peace between Russia and Ukraine that drew condemnation from Ukraine’s leader Volodymyr Zelensky.

Musk argued that Twitter’s public estimates that less than 5 per cent of accounts are bogus were wrong – suggesting the figure was as high as 20 per cent. 

He piled pressure on Twitter in June with a threat to walk away from the deal altogether, accusing the firm of a ‘material breach’ of its obligations.

And when Musk finally confirmed suspicions he had gone cold on the deal, shares crashed, taking losses to more than a third since he revealed his 9.2 per cent stake. 

Twitter responded by suing Musk – who is worth an estimated £205billion – in a bid to force him to complete the deal.

As part of the deal settled in April, Musk and Twitter had agreed to pay each other a $1billion break-up fee if either was responsible for it falling through.

It set up a bitter battle, but one which many observers believed would be impossible for the billionaire to win. The legal fight saw scores of Musk’s private messages with well-known figures in the world of tech made public.

The case also saw Musk attempt to use claims made by Twitter whistleblower Peiter Zatko to scrap the deal.

Former security head Zatko claimed that executives at the social media site had deceived regulators and the company’s board about holes in its defences against hackers.

An emergency court hearing in the US on Musk’s letter was expected as early as last night.

Hargreaves Lansdown analyst Susannah Streeter said: ‘It is the latest twist in the dramatic takeover saga, and comes just two days before he [Musk] was set to be deposed by Twitter’s lawyers, raising speculation that ‘Team Musk’ believe the chances of the court ruling in his favour were slim.’