Billionaire Elon Musk has decided to stop fighting Twitter in court and go ahead with his original offer to buy the company for $44 billion.
The company’s shares rose 13 percent before being halted when Musk filed a letter with regulators, saying he has decided to go ahead with his plan to buy the social media company.
It first floated buying the company in April before trying to back out of the deal this summer, citing concerns about the number of bots on the platform. The two sides have been fighting in court ever since in a trial that was set to begin in Delaware Court of Chancery on Oct. 17.
The filing says it will complete the deal as long as it gets debt financing and as long as the lawsuit is thrown out by the court.
Most legal experts believed he faced an uphill battle to convince Chancellor Kathaleen St. Jude McCormick, the court’s chief judge, who does not have to meet the terms of the binding offer to buy the company for more than $54.20 per share.
Twitter shares rose 13 percent to US$48 on the news, before being halted.
Ann Lipton, a law professor at Tulane University, told CBC News that Musk’s legal argument was never too big.
“My view was always that Twitter had the much stronger case,” he told CBC News in an interview. “I didn’t expect him to capitulate exactly at this moment, but I did.”
While the deal doesn’t necessarily have to go ahead as planned, she says that’s the most likely outcome given that all parties would prefer to move forward.
The ugly back-and-forth “makes him look like an unreliable deal partner, but I’m not sure anyone would think otherwise to begin with,” he said, referring to Musk. “I mean, the guy offered a price that was a weed joke,” he said, referring to Musk’s $4.20 bid price, a well-known moniker associated with cannabis.
Robert Anderson, a law professor at Pepperdine University, says Twitter has the right to demand more assurances before dealing in good faith with Musk.
“Twitter could still be concerned about the same thing happening again without additional security,” Anderson said. “They’re going to want some assurance that the deal will happen immediately.”