Musk makes U-turn before trial, tells Twitter he’ll complete merger [Updated]

Elon Musk has told Twitter he is once again willing to buy the company at the originally agreed-upon price, according to a Bloomberg News report.

"Elon Musk is proposing to buy Twitter Inc. for the original offer price of $54.20 a share... Musk made the proposal in a letter to Twitter, according to people familiar with the matter, who asked not to be identified discussing confidential information," Bloomberg wrote.

The Wall Street Journal subsequently reported that Musk's "lawyers communicated the proposal to Twitter's lawyers overnight Monday and filed a letter confidentially with the Delaware Chancery Court ahead of an emergency hearing on the matter scheduled for Tuesday."

The reports come less than two weeks before a trial is scheduled to determine whether Musk would be forced to go through with the deal. Musk agreed to buy Twitter on April 25, then tried to back out of the deal on July 8. Twitter sued Musk in Delaware Court of Chancery to force him to complete the $44 billion purchase, and a five-day trial is scheduled to begin on October 17. Musk was also scheduled to answer questions in a deposition later this week.

"If Twitter accepts the proposal, the two sides wouldn't have to follow through on a five-day nonjury trial set to begin October 17. There are no guarantees they will reach a deal and the trial could still go forward as planned," the WSJ wrote.

Trading of Twitter stock was temporarily halted after the Bloomberg report. After trading resumed, the stock price rose nearly 13 percent, hitting $47.93.

Musk seeks stay in court case

Update, 5:12 pm ET: Musk's letter to Twitter is now public and was included in a Securities and Exchange Commission filing. It says that Musk wants to complete the merger "provided that the Delaware Chancery Court enter an immediate stay of the action... and adjourn the trial and all other proceedings related thereto pending such closing or further order of the Court." The offer to complete the deal is also pending receipt of Musk's debt financing.

While Musk's request would prevent the trial from beginning as scheduled, a stay would not stop Twitter from resuming its lawsuit against Musk if he pulls out of the deal again.

Twitter reportedly leery of new offer amid “distrust”

Musk lost a few key pre-trial rulings in the Delaware court. For example, Judge Kathaleen McCormick denied his request to delay the trial until at least February 2023. "The reality is delay threatens irreparable harm to the sellers," she said.

Musk's attempt to exit the merger centers on his unproven claim that Twitter's spam estimates are wrong. Twitter says that fewer than 5 percent of its monetizable daily active users (mDAU) are spam or fake, and pointed out that Musk's attempt to prove the estimate wrong relied on a tool that labeled his own account a likely bot. Twitter also argues that Musk has no right to exit the deal based on spam data, saying he "forwent all due diligence" when giving Twitter a take-it-or-leave-it offer.

Twitter reportedly won't take immediate action in response to Musk's new proposal, and would want the court to oversee the process if the merger does proceed. "Twitter is considering whether to accept the proposal, and will not act for at least another day, according to one of the people [familiar with the negotiations]," The Washington Post reported. "Because there is great distrust on both sides, Twitter leaders are questioning whether the letter represents a legal maneuvering, this person said."

"The court held an emergency hearing Tuesday morning with both sides," the Post also wrote. "Musk was willing to drop the case but Twitter wanted assurances that the court would oversee the process because of the distrust, one of the people said. There is another hearing scheduled later Tuesday."