Twitter shares up 12.7% on the news.
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.
Shares in the company jumped 13 per cent before being halted when Musk filed a letter with regulators, saying he has decided to go ahead with his on-again, off-again plan to buy the social media company.
He first pitched 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 it out in court ever since in a trial that was set to start in Delaware Chancery Court on Oct. 17.
The filing says he’ll complete the deal as long as he gets debt financing and provided that the court gets rid of the lawsuit.
Most legal experts believed he faced an uphill battle in convincing Chancellor Kathaleen St. Jude McCormick, the court’s head judge, that he does not have to live up to the terms of the binding offer to buy the company for more than $54.20 US a share.
Twitter shares jumped 13 per cent to $48 US on the news, before being halted.
Ann Lipton, a law professor at Tulane University, told CBC News that Musk’s legal argument never really amounted to much.
“My view was always that Twitter had the much stronger case,” she told CBC News in an interview. “I wasn’t expecting him to capitulate at exactly this moment, but I did expect so.”
While the deal doesn’t necessarily have to go ahead as planned, she says that’s the most likely outcome given that all sides would prefer to move on.
The ugly legal back and forth “makes him look like an unreliable deal partner, but I’m not sure that anybody thought anything else to begin with,” she said, referring to Musk. “I mean, the man offered a price that was a weed joke,” she said, referring to the 4.20 in Musk’s offer price, a well known nickname associated with cannabis.
Robert Anderson, a law professor at Pepperdine University, says Twitter is within its rights to demand more assurances before dealing in good faith with Musk.
“Twitter could still be concerned that the same thing might happen again without some additional security,” Anderson said. “They’re going to want some assurance that the deal is going to happen right away.”
ABOUT THE AUTHOR
Senior Business Writer
Pete Evans is the senior business writer for CBCNews.ca. Prior to coming to the CBC, his work has appeared in the Globe & Mail, the Financial Post, the Toronto Star, and Canadian Business Magazine. Twitter: @p_evans Email: firstname.lastname@example.org
With files from the CBC’s Meegan Read
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