By Tom Krisher, Matt O'Brien & Randall Chase
Trading in shares of Twitter was halted after the stock spiked on reports that Elon Musk would proceed with his $44 billion deal to buy the company after months of legal battles.
For a second time, Musk offered to buy the San Francisco company at $54.20. Twitter's stock jumped nearly 13% to $47.93 before trading stopped on the New York Stock Exchange, which listed "news pending" as the reason for the halt. Trading halts are how stock exchanges give investors a forced timeout when trading for a stock gets too chaotic, or when a company is about to offer market-moving news.
Bloomberg News reported Tuesday that Musk made the proposal in a letter to Twitter, according to people familiar with the case who were not identified.
Musk has been trying to back out of the deal for several months after signing on to buy the social media platform in April. Shareholders have already approved the sale, and legal experts say Musk faced a huge challenge to defend against a Twitter lawsuit, which was filed in July.
Musk claimed that Twitter under-counted the number of fake accounts on its platform, and Twitter sued when Musk announced the deal was off.
Neither Twitter nor lawyers for Musk responded to messages seeking comment on Tuesday.
The trial seeking to compel Musk to buy Twitter is set to start in Delaware Chancery Court on Oct. 17.
Musk's argument for walking away from the deal has largely rested on the allegation that Twitter misrepresented how it measures the magnitude of "spam bot" accounts that are useless to advertisers. But most legal experts believe he faced an uphill battle in convincing Chancellor Kathaleen St. Jude McCormick, the court's head judge, that something changed since the April merger agreement that justifies terminating the deal.
By going through with the deal, Musk essentially gave Twitter what it was seeking from the court — "specific performance" of the contract with Musk, meaning he would have to go through with the purchase at the original price. The contract Musk signed also has a $1 billion breakup fee.
Eric Talley, a law professor at Columbia University, said he's not surprised by Musk's turnaround, especially ahead of a scheduled deposition of Musk by Twitter attorneys starting Thursday that was "not going to be pleasant."
"On the legal merits, his case didn't look that strong," Talley said. "It kind of seemed like a pretty simple buyer's remorse case."
If Musk were to lose the trial, the judge could not only force him to close the deal but also impose interest payments that would have increased its cost, Talley said.
What did surprise Talley is that Musk doesn't appear to be trying to renegotiate the deal. Even a modest price reduction might have given Musk a "moral victory" and the ability to say he got something out of the protracted dispute, Talley said.
Wedbush analyst Dan Ives wrote in a note to investors that Musk's latest offer is a clear sign that he recognized his chances of winning were slim.
"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."
Among the remedies that would favor Twitter is a court order to go through with the deal. The Chancery Court last year forced private equity firm Kohlberg & Co. to go through with its $550 million buyout of DecoPac, a company based in Minnesota that calls itself the world's largest supplier of cake decorating supplies to professional decorators and bakeries. The case was emblematic of the court's common — though not uniform — resolution of enforcing contractual obligations on buyers.
Other options include Musk being forced to pay the breakup fee each side agreed to if deemed responsible for the deal falling through. Or he might have to pay off a larger amount without actually buying the company for $44 billion.
Legal experts have said that Delaware courts have been picky about interpreting what counts as a valid reason for backing off of a deal. The gap between what Musk knew about Twitter when he made the offer in April and the state of the company today had to be huge, and there's little evidence of that, one lawyer said.
Tom Krisher, Matt O'Brien & Randall Chase are AP writers
Sinners and Saints Adds Apple Pie To Its Branded Menu
Bicoastal Sinners and Saints--the multidisciplinary studio overseen by managing director/executive producer Heather Heller, and partners/EPs Yann Henric and Thomas Carroll--has added Apple Pie Tabletop to its roster for branded content. Known for its food and beverage content creation, Apple Pie comprises the husband-and-wife team of director/DP Gene Dubin and director/art director Alisa Volodina. In addition to representation, the move expands Apple Pie’s production capabilities through the combination of its centrally located full-service studio in New York and a newly established mobile studio in Los Angeles. Apple Pie recently teamed with Sinners and Saints on a Wienerschnitzel project created by Innocean.
“We believe that our dual studio strategy positions us uniquely in the competitive landscape of food and beverage storytelling,” said Heller. “By blending the artistry of the New York studio with the flexibility of our Los Angeles location, we can tailor our productions to meet the unique demands of each project, regardless of geography.”
“Working with Sinners and Saints in the demanding field of tabletop was an absolute pleasure,” shared Apple Pie Tabletop in a joint statement. “Warm welcome, unwavering support and dedication--everything a director can ask for. The entire experience was both enjoyable and rewarding. We will not miss an opportunity to collaborate with them again.”
“The first thing you notice is that Apple Pie has beautiful work,” Heller observed. “Having worked with them, I can say that Gene and Alisa are extremely meticulous and detail-oriented; their combination of talent and agility appeals to agencies and clients.” Also appealing to Heller is Apple Pie Tabletop’s brisk international... Read More