The price of $54.20 per Twitter share set in April by the billionaire was agreed to by both parties on Tuesday.
Correspondent in Washington,
Elon Musk preferred to turn around again, rather than risk losing a lawsuit. The unpredictable industrial finally chooses to honor its promise made in April, to buy Twitter for 44 billion dollars. The price of 54.20 dollars per share of Twitter, accepted in April by Elon Musk, should be respected. The surprise caused the group’s share price to jump 22% on the Nasdaq on Tuesday. Twitter’s price, up to $52, now reflects the belief of a long-skeptical market that the initial transaction will occur.
Lawyers for the two parties are negotiating the terms of an agreement that would avoid the trial which was to begin on October 17 before the Court of Chancery of Delaware, a court specializing in disputes relating to acquisitions of businesses. It was before this body, known for its rapid decisions and its very unfavorable jurisprudence with regard to business acquirers who change their minds, that Twitter dragged Elon Musk in July in order to force him to hold his costly commitment. In recent days, during the preliminary phase of the trial, Judge Kathaleen McCormick had already ruled several times in favor of Twitter’s lawyers on various points of procedure.
The burden of proof was very high for Elon Musk. He first had to demonstrate that Twitter had deliberately overestimated the number of human users of its platform. Then he had to prove that this subterfuge had a sufficiently significant material impact on the valuation of the company to invalidate the terms of the acquisition. However, according to Twitter lawyers, the two experts hired by Musk to estimate the proportion of false accounts opened with the social network, made conclusions insufficient to establish cheating. One would have judged that 5.3% of the accounts were fake. The other would have set the bar at 11%. Twitter for its part has always argued that less than 5% of its users were in fact robots.
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Uncertain future for Twitter
If Elon Musk does indeed become the owner of Twitter, at the high price initially agreed, the management of the Californian group will have won a strange victory. For months, Elon Musk has been strongly criticizing its management, the way it protects the private data of tweeters, its criteria for censoring tweets, as well as its dependence on advertising revenue. It is hard to see how Parag Agrawal, the boss of the San Francisco firm, will be able to stay in place.
The plans for Twitter of the billionaire, who is already the boss and founder of the car manufacturer Tesla and the space transport company SpaceX, are not very clear. While the network’s financial results are disappointing, to the point that the company posted losses in the second quarter, the morale of its teams has suffered greatly from the dispute between its acquirer and the leaders in place. Twitter is famous in the world of media and politics, but has only 238 million active monetizable users on average each day, which remains marginal compared to the 2 billion daily users of Facebook.
Before going back on his promise to purchase, Elon Musk advanced his intention to more than double the number of Twitter users by 2025. The capricious libertarian, who loves to express himself on all subjects, and counts on the network 107 million fans, wants to make Twitter “the world free speech forum“. It is on this platform that he proposed on Monday the outline of a “peace planbetween Russia and Ukraine… before being criticized by President Zelensky, while on the contrary the Kremlin described the initiative as “very positive“.
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The captain of industry also criticized Donald Trump’s tweet ban since January 8. He argued for a subscription-based business model. He is also considering offering Twitter users money transfer services. Elon Musk is known for his innovative boldness, but to date he has not unveiled a recovery plan for the company he is about to buy at a high price.