The world’s wealthiest person is returning to a planned $44 billion purchase of Twitter, with motives including developing a mysterious app called “X.”
In an official filingwith the Securities and Exchange Commission (SEC) dated Oct. 4 2022, Musk said he sent a letter to Twitter on Oct. 3, 2022 indicating he intends to proceed closing a transaction initially proposed April 25, 2022.
Under terms of that deal, Musk agreed that an entity wholly owned by him would acquire Twitter for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter would become a privately held company.
According to the terms of the agreement, Twitter stockholders would receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38% premium to Twitter's closing stock price on April 1, 2022, which was the last trading day before Musk disclosed his approximately 9% stake in Twitter.
An Oct. 4 tweeton the verified Twitter Investor Relations Twitter account acknowledged Musk’s letter and said the company will move ahead with the deal.
“Twitter issued this statement about today's news: We received the letter from the Musk parties which they have filed with the SEC. The intention of the company is to close the transaction at $54.20 per share,” stated the tweet.
The road to ‘X’ In addition, in a Oct. 4 tweet posted on his verified Twitter account, Musk stated, “Buying Twitter is an accelerant to creating X, the everything app.” In a response to a post asking why he wouldn’t just build X from scratch, Musk tweeted, “Twitter probably accelerates X by 3 to 5 years, but I could be wrong.”
While Musk has not publicly specified what exactly an “everything app” would do, media outlets including CNN are speculating he wants to turn Twitter into a “super app” such as the Chinese WeChat app, which provides functionality including mobile payment, messaging and social media from a single platform.
Musk changes course - again In a letter sent on Friday, July 8 from a law firm representing Tesla cofounder/CEO Elon Musk to Twitter chief legal officer Vijaya Gadde, attorney Mike Ringler notified Twitter that Musk was terminating the definitive agreement he entered in April 2022 to purchase Twitter.
In the letter, Musk’s attorney said he was exercising a right to “terminate the merger agreement and abandon the transaction contemplated thereby.” The agreement does contain a clause allowing Musk to walk away from the deal for a $1 billion fee. However, Twitter has the right to dispute Musk’s reasoning in court and hold him to the $44 billion acquisition.
As indicated in a July 8 tweet from Brett Taylor, Twitter chairman and Salesforce co-CEO, the social media platform did just that.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” Taylor said in the tweet. “We are confident we will prevail in the Delaware Court of Chancery.” That trial was scheduled to begin Oct. 17, 2022.