Everything we don’t know about Elon Musk’s latest about-face on Twitter

Elon Musk needs to purchase Twitter for $54.20 a share: A headline from April, sure, but in addition breaking information, with the on-again, off-again Silicon Valley saga looping again round on itself to finish up, on the eve of a courtroom showdown, precisely the place it began.

With a trial over the stalled merger set to start Oct. 17, the Tesla billionaire proposed Monday night to consummate his courtship of the social media platform on the authentic worth he agreed to pay in April.

A pointy downturn within the inventory market shortly made the $44-billion buy worth appear excessive, and it wasn’t lengthy earlier than Musk sought to again out, saying Twitter had too many bot accounts and was not clear concerning the subject.

Though many Twitter workers have been leery of Musk, who brazenly disparaged them as lazy activists, the corporate’s administration had little selection however to take him to court docket or danger the wrath of its personal shareholders.

The most recent growth suggests Musk has come to agree with the numerous observers who noticed a Twitter victory as all however assured. “Shopping for Twitter is an accelerant to creating X, the all the pieces app,” he tweeted Tuesday.

However what modified his thoughts? May he nonetheless see a means out of the deal? And what occurs subsequent for Twitter, both means?

Right here’s what we nonetheless don’t know.

Will the deal undergo?

After the occasions of the final six months, it might be onerous to take Musk’s newest proposal at face worth.

Musk initially bought a stake in Twitter with out the mandatory public disclosures, then agreed to hitch its board of administrators, solely to stroll away from that settlement to pursue the acquisition he would quickly be making an attempt to halt. He has publicly criticized Twitter’s executives, urged they misled him and buyers concerning the platform’s downside with bots, or automated accounts, and mused that the service could also be dying.

Cautious of one other reversal, Twitter has reportedly requested the Delaware Courtroom of Chancery to superintend the closing.

May Musk nonetheless discover a means out?

It’s conceivable. A letter from Musk’s attorneys declared his intent to shut the deal as initially agreed to in April, “pending receipt of the proceeds of the debt financing.”

That phrase might be important. Musk’s $44-billion supply included $13 billion of debt financing from banks, together with Morgan Stanley, Financial institution of America and Barclays. Underneath the phrases of the merger settlement, Musk may escape the deal by paying a $1-billion breakup charge if the financial institution financing falls by way of, mentioned Ann Lipton, a regulation professor at Tulane College.

However there’s a catch: That’s solely true so long as Musk shouldn’t be decided to have sabotaged the financing or influenced the banks himself, Lipton mentioned.

The banks may have their very own motives for preferring to see the deal fail. They’ve struggled to dump buyout debt to buyers in latest months and are dealing with large potential losses from the Twitter deal, in addition to many others.

However, the banks face each authorized obligations and reputational stress to observe by way of on their commitments, nonetheless costly. In the event that they bail, the chancery court docket may require Musk to carry them to their lending commitments, even when that entails Musk suing them to finish the financing, Lipton mentioned.

The possibilities of a financial institution pullout “are fairly slim however not unattainable,” mentioned Eric Talley, a professor at Columbia Legislation College.

Did unhealthy publicity for Musk and his billionaire associates play a job?

It’s a theory. The invention section of the case had already yielded a trove of inner emails and textual content messages between Musk and different Silicon Valley whales and even, for some cause, Joe Rogan.

A few of the texts have proven Musk showing unprepared or uninformed. Provided an introduction to crypto billionaire Sam Bankman-Fried, Musk didn’t appear to know who he was. In speaking to Twitter Chief Government Parag Agrawal, he wrote, “I kinda don’t suppose I must be the boss of anybody.”

On the opposite aspect of the exchanges, Musk’s associates got here throughout in some circumstances as sycophantic, careless or each.

Oracle founder Larry Ellison and enterprise capitalist Marc Andreessen each provided large sums of cash to again the cope with no obvious intention of performing any due diligence. Angel investor Jason Calacanis provided himself up as a candidate for Twitter CEO — “Put me within the sport coach!” he texted — and managed to harass Musk by making an attempt to boost exterior funds for the deal with out Musk’s permission.

The messages additionally confirmed Musk’s deepening ties to the political proper. Joe Lonsdale, a conservative enterprise capitalist, texted Musk that Florida Gov. Ron DeSantis was in assist of him.

Mathias Dopfner, CEO of media conglomerate Axel Springer, texted him: “Why don’t you purchase Twitter? We run it for you.” Dopfner as soon as requested executives at his firm to hope for Trump’s reelection.

Others reached out to easily rejoice the information.

“You’re the hero Gotham wants – hell F’ing sure!” Riot Video games founder Marc Merrill texted to Musk.

“Are you going to liberate Twitter from the censorship completely happy mob?” Rogan texted him.

Musk was additionally resulting from be questioned underneath oath later this week.

What occurs to Twitter now?

Though the messages launched in discovery make clear Musk’s imaginative and prescient for Twitter as a free speech haven, his plans for the corporate are nonetheless unclear. In a gathering with workers in June, Musk mentioned he wished to achieve 1 billion each day energetic customers and make the corporate worthwhile.

To do that and pay down the debt he’s taking up on this deal, Musk has a troublesome process forward of him. Within the June assembly, Musk implied layoffs have been possible with the intention to carry down Twitter’s prices, which at the moment exceed income. A few of his allies have urged he lay off a big fraction of Twitter’s 8,000 workers.

Whether or not in anticipation of these cuts or of Twitter turning into one thing they might discover politically unpalatable, workers have already been leaving the corporate in droves, Enterprise Insider reported in August.

Occasions workers writers Russ Mitchell and Michael Hiltzik contributed to this report.