November 29, 2022

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Elon Musk suggests buying Twitter at its original price

Elon Musk suggests buying Twitter at its original price

Elon Musk, in a surprise move that adds another twist to the months-long drama that has plagued Silicon Valley, Wall Street and Washington, proposed a deal with Twitter on Monday night that could end a fierce legal battle between the billionaire and the socialite. Media company.

The arrangement would allow Mr. Musk to acquire Twitter at $54.20 per share, the price he agreed to pay the company in April, two people familiar with the offer said who were not authorized to speak publicly.

Twitter, which sued Mr Musk in July to force him to go through with the deal after saying it wanted to back down, has not yet accepted Mr. Musk’s new proposal. His advance could be seen as a negotiating tactic to stop litigation against him on Twitter.

Legal experts said Twitter will likely insist on broader protection measures from a court in Delaware, where the lawsuit was filed, to ensure Mr. Musk follows through on his plan. But the deal could allow both sides to avoid a chaotic public trial, which is likely to include testimony from Mr Musk and top Twitter executives. Mr. Musk is scheduled to be deposed Thursday and Friday in Austin, Texas, according to a legal claim.

The potential agreement comes after months of controversies that created existential challenges for Twitter, sending its stock price down, demoralizing its employees and raising concerns for advertisers it depends on for revenue.

And the public battle between Mr. Musk and the company he pursued, ignored and pursued again, it seems, has also revealed surprising fault lines between the professional executives tasked with running the tech industry and risky entrepreneurs and investors.

Mr. Musk, with his frequent harsh criticism of Twitter and its management, often seemed more interested in taking the ball to the company than in becoming its new owner. Mr. Musk’s critics argued that he was simply looking for anything to justify reversing a reckless decision he quickly regretted.

“I think he recognized that litigation was not going well on his part,” said Ann Lipton, professor of corporate governance at Tulane College of Law.

Twitter has hardly been profitable for most of its history and dwarfs in size compared to other social media platforms like Facebook and younger TikTok. But it has for years been an online magnet for tech billionaires like Mr. Musk and politicians like former President Donald J. Trump, who Twitter banned from its platform after the January 6 riots on Capitol Hill.

If Mr. Musk takes over Twitter, one of his first big moves with the company may be to let Mr. Trump back in. Mr. Musk said it was Twitter ‘mistake’ to ban Mr Trump.

The deal at the original price would be a victory for Twitter, which struck an agreement with Mr. Musk in April to sell the company For $44 billion. Mr. Musk announced in July that he no longer intends to continue with the acquisition because he believes Twitter service overrun by spam. Twitter sued him soon after.

Mr. Musk made his latest offer to Twitter on Monday evening, informing the company that he intends to move forward with his original offer. Musk’s lawyer wrote in the letter, according to regulatory deposit. The letter requested that the court battle be paused, pending closing of the deal.

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In a short statement, Twitter said it had received Mr. Musk’s message and confirmed the company’s intention to close the deal.

What we consider before using anonymous sources. Do you know the sources of information? What is their motive for telling us? Has it been proven reliable in the past? Can we confirm the information? Even as these questions satisfy, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.

The two sides met in court in an emergency virtual hearing on Tuesday to discuss the motion before Catalyn McCormick, the trial judge. The proposal was reported earlier by Bloomberg.

The source said Mr Musk’s lawyers and Twitter are expected to meet again in court later on Tuesday to discuss next steps. If they choose to go ahead with the Twitter sale, the deal will likely close within weeks, or once Musk delivers the $44 billion he promised.

“Procedurally speaking, Twitter has done everything they needed to close this deal,” said Brian JM Quinn, a professor at Boston College of Law. Quinn said that if the company accepted Mr. Musk’s proposal, it could request that the trial be postponed until the deal is completed. Once the acquisition is finalized, Twitter will likely dismiss the lawsuit against Mr. Musk.

The economic background has changed dramatically since Mr. Musk first announced his intention to buy Twitter last spring. Amid inflation and geopolitical uncertainty, market investors face kinds of losses They haven’t seen him since 2009.

Investment banks, led by Morgan Stanley, have already agreed to help finance the deal with about $13 billion in debt. The banks remain in limbo until next April, according to the terms of their contract.

Mr. Musk said he would fund the rest of the deal in cash. In April, he Sold About $8.5 billion shares in Tesla to help fund the deal; in May, He said he has raised about $7 billion in cash from a group of investors including venture capital firm Andreessen Horowitz and tech mogul Larry Ellison. It was not immediately clear what commitments these investors have made to Mr. Musk.

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In August, Mr. Musk Sold He said at the time that an additional $7 billion worth of Tesla stock was in the “(hopefully unlikely) event that Twitter forced this transaction to close and some of the stock partners did not implement it.”

Shares in the social media company rose more than 12 percent after news of Mr. Musk’s latest offer, before trading halted.

Twitter employees learned of Mr. Musk’s proposal from media reports as they participated in a company-wide meeting on the company’s plans for 2023 on Tuesday, Confusion and speculation Four employees said:

Those people added that Paraj Agrawal, CEO of Twitter, and other senior leaders did not immediately speak about Mr. Musk’s offer with employees.

On Slack’s internal channels on Tuesday, employees discussed the implications for the company, their jobs, and their stock compensation. In a channel of nearly 2,000 members used to joke about company news, some workers wondered what would happen if Twitter’s board did not accept Mr. Musk’s renewed offer. Some speculated that Twitter’s stock would fall, while another said the company would not be owned by a “moron,” using an expletive to refer to Mr. Musk.

While the agreement signals an end to the uncertainty surrounding Twitter’s immediate future, Mr. Musk’s plans for the company aren’t clear. Shareholders voted in September to approve the original deal with Mr. Musk, who told investors before trying to back out that by 2025 the company could reach 500 million daily users and $13.2 billion in revenue.

Twitter and Mr. Musk She is set to face this month in a Delaware courtroom. The company argued in legal filings that Mr. Musk’s reasons for abandoning the deal were smoke screens, and indicated that he was simply hoping for a drop in the price after stock market drops reduced his overall fortune.

Mr. Musk said Twitter has likely reduced the amount of spam on its platform, making the company less valuable than initially thought. as martyred Whistleblower Claims From a former Twitter executive, he said the company misled regulators about its security practices, as a reason to exit the deal.

Ryan Mac Contribute to the preparation of reports.