In an unexpected turn of events, Twitter announced on Tuesday afternoon that it plans to close its deal with billionaire Elon Musk after the Tesla and SpaceX CEO signaled that he planned to go forward with the initial $44 billion deal.
The news sent Twitter stock skyrocketing, increasing 22% and only continuing to rise throughout the afternoon.
Musk’s proposed $54.20 per share offer was initially rejected by the board, but was accepted in April. However, it wasn’t long before Musk announced he would be walking away from the deal after Twitter was unable or unwilling to verify the number of bot accounts on its platform, maintaining that the number was less than 5%. Musk had publicly theorized that the number could be as high as 33%.
Twitter then filed a lawsuit against Musk, accusing him of refusing to honor his obligations under the agreement because “the deal he signed no longer serves his personal interests.” Musk has since filed a countersuit, which was amended last month to include allegations from whistleblower and Twitter’s former security chief Peiter “Mudge” Zatko who claimed that the company has serious security deficiencies.
“The company’s cybersecurity failures make it vulnerable to exploitation, causing real harm to real people,” Zatko told lawmakers. “When an influential media platform can be compromised by teenagers, thieves and spies, and the company repeatedly creates security problems on their own, this is a big deal for all of us.”
While the highly anticipated trial is planned to occur on Oct. 17 in the Delaware Court of Chancery, it’s now up in the air as to whether or not it will take place at all.
Wedbush analyst Daniel Ives called the proposal a “smart move,” but he added that it is a “clear sign” that Musk recognized his chances of winning in Delaware were 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,” Ives wrote in a note to clients on Tuesday. “We see minimal regulatory risk in this deal although now Musk owning the Twitter platform will cause a firestorm of worries and questions looking ahead among users and the Beltway.”
Twitter’s shareholders have already offered their approval and voted last month to accept the deal with Musk.
