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Elon Musk Twitter deal back on in surprise u-turn

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Image source, Reuters

Billionaire Elon Musk has apparently changed his mind about buying Twitter, again, and is now willing to proceed with his takeover of the social media platform.

In a letter to the firm, Mr Musk agreed to pay the price he offered months ago before trying to quit the deal.

The surprise reversal comes just weeks before the two sides were due in court.

Twitter, which had sued Mr Musk to force the takeover to move forward, was seen as having the better case.

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In the letter, attorneys for Mr Musk, a prolific Twitter user with more than 100 million followers, said he intended to move ahead to complete the transaction, pending receipt of the financing, and asked to end the legal fight.

A spokesperson for Twitter said it had received the letter and planned to close the deal at the $54.20 per share price Mr Musk promised in April.

The apparent win for Twitter sent its shares soaring more than 20% to more than $52 apiece. But the value remained lower than the takeover price, in a sign of lingering investor doubts the deal will go through.

Elon Musk and Parag Agrawal

Image source, Getty Images

When Mr Musk first revealed plans to buy Twitter in a $44bn deal, he said he wanted to clean up spam accounts on the platform and preserve it as a venue for free speech.

But the billionaire, known for his impulsive style, balked at the purchase just a few weeks later, citing concerns that the number of fake accounts on the platform was higher than Twitter claimed.

Twitter executives denied the accusations, arguing that Mr Musk – the world’s richest person with a net worth of more than $220bn – wanted out because he was worried about the price.

The back-and-forth followed a sharp downturn in the value of technology stocks, including Tesla, the electric car company that Mr Musk leads and is the base of much of his fortune.

The fight, which was scheduled to go to trial 17 October, saw the two sides face off in lengthy court filings, private messages and bitter public spats on Twitter.

In one such exchange, Mr Musk responded to Twitter boss Parag Agrawal with an emoji for fecal matter.

Preparation for the trial had ensnarled many of the biggest names in tech, as lawyers for the two companies demanded communications about the deal.

Mr Musk, who could have paid a $1bn break-up fee to walk away, was set to be interviewed ahead of the trial this week.

Some industry watchers, who were taken by surprise by the development, questioned whether the latest twist was a concrete offer or a delay tactic.

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Analysis box by James Clayton, North America technology reporter

It’s never dull with Musk.

Elon Musk has for months now been trying to get out of this deal.

In doing so he has argued that Twitter is full of bots.

He has said on multiple occasions that Twitter may have many times more fake accounts than it admits to.

By making these claims he has helped to tarnish the reputation of the company.

Advertisers are nervous – they want to buy ads that are seen by humans, with wallets, not bots.

So for Elon Musk to buy the company again, at the initial price, seems bizarre.

It suggests he thinks a judge might force him to move forward, having already signed a deal.

Twitter is reportedly looking at Mr Musk’s offer closely. Musk’s behaviour in this deal has so far been erratic. Could this be a legal strategy to delay a court case?

But it’s a massive win for Twitter’s shareholders and its lawyers.

Many Twitter employees, however, will be less pleased. I’ve spoken to several employees who are privately nervous about a Musk takeover, and what that might mean for moderation policies – and more acutely – their own job security.

And as for Twitter’s CEO Parag Agrawal? Well, emails disclosed last week suggests he doesn’t get along well with Musk.

A Musk Twitter takeover would almost certainly mean a new person in charge of the company.

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At Twitter, which has been thrown into turmoil since Mr Musk first turned his attention to the firm, staff told the BBC that their bosses had so far remained silent on the matter, even as the report spread widely.

Investors have long been sceptical that the takeover would go forward, especially since Mr Musk was seen as offering a heady price for a firm struggling to attract users and grow.

Twitter shares had been trading below $43 apiece at the start of the day.

News that Mr Musk had proposed to honour the original agreement sent shares in the company soaring almost 13% before trading was halted.

When trading resumed, shares shot above $52 apiece – but remained shy of the transaction price in a sign of lingering doubts.

Wedbush Securities analyst Dan Ives said Mr Musk’s chance of winning in court was “highly unlikely”.

“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 wrote in a report after the news.

But he added, that Mr Musk’s ownership of the platform, a top venue for politicians and journalists to spread news and opinion, would still likely cause a “firestorm of worries and questions” in Washington and beyond.

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