The megadeal is back on. Tesla Inc (NASDAQ:TSLA) CEO Elon Musk has opted to proceed with his offer to purchase Twitter Inc (NYSE:TWTR) for $44 billion, rather than face legal challenges, according to a report from Bloomberg.
According to unnamed sources familiar with the matter, Musk filed a confidential letter with the Delaware Chancery Court on Monday night agreeing to move forward with the deal. If he hadn’t, he was expected to be deposed later this week as part of a lawsuit filed by Twitter in July when Musk threatened to pull out of the agreement.
In April, Musk agreed to buy the social media giant for $54.20 per share (at the time the company traded at roughly $45 per share). He attempted to pull out of the deal in July (when the stock was trading around $37 per share), alleging that Twitter was concealing information about the number of fake accounts on its platform. Twitter shareholders approved the deal in September, and the matter appeared to be headed to court.
News that the deal is back on vaulted Twitter shares more than 12% higher to $47.95 Tuesday afternoon.
READ: Jack Dorsey wanted Elon Musk involved with Twitter last year, texts reveal
That said, Musk may be buying a company wounded by his own actions, according to Hargreaves Lansdown senior investment and markets analyst Susannah Streeter.
“If the deal does eventually go through, this bout of buyer’s remorse may have damaged the company he will end up owning,” Streeter wrote.
“He has been like a dog with a bone in his focus on the number of fake bots on the platform. This is an important metric considered to be key for future revenue streams via paid advertising or for subscriptions on the site, and his relentless scrutiny of Twitter’s figures over the last few months is likely to prompt questions from potential advertising partners.”
She added: “If he does end up being the owner he’ll face a huge challenge of maintaining and building revenue, given that the controversial opinions he appears to want to give more of a free rein to are often unpalatable to advertisers."
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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