Elon Musk and Twitter came close to a deal at $50 per share. Here's why it didn't work out.

Advertisement
Elon Musk and Twitter came close to a deal at $50 per share. Here's why it didn't work out.
Musk tweeted on Friday that his $44 billion deal to buy Twitter was on hold.AP
  • Discussions recently revolved around $50 a share, down from an initial $54.20 per share price.
  • Talks broke down as both sides pushed concessions the other was unwilling to grant, people familiar said.
Advertisement

In the days before Elon Musk renewed his original offer to acquire Twitter, the two sides discussed doing the deal at the discounted price of $50 per share, according to people familiar with the situation.

That represented a roughly 8% discount for Musk, and savings of more than $3.3 billion versus his original $44 billion offer. Other prices were discussed, according to reports in The New York Times and The Wall Street Journal, but a price of $50 per share was the subject back and forth last week, two of the people said. They all asked not to be identified discussing private negotiations. Twitter shares closed at $49.13 on Friday.

Talks between the sides quickly broke down, a common occurrence when it comes to Musk negotiating with Twitter and its executives.

Complimentary Tech Event
Transform talent with learning that works
Capability development is critical for businesses who want to push the envelope of innovation.Discover how business leaders are strategizing around building talent capabilities and empowering employee transformation.Know More

Musk attorney Alex Spiro told Insider that Musk ultimately decided to do the deal at the original $54.20 a share price and on the original terms, because he refused to accept "all kinds of things" Twitter's executives and its board were demanding be included in a renegotiated deal.

"They want the carrot and no stick," Spiro said.

Advertisement

The Twitter bot debate raged on

Spiro did not say what exactly Twitter's side was demanding. However, the main sticking point throughout months of tortured negotiation has been Musk's allegation that Twitter misrepresents how many "bots," or inauthentic accounts, are on its platform. Musk's lawyers have been pursuing documentation and deposing Twitter executives and employees to hunt for evidence of fraud related to this.

Twitter wants Musk to drop the bot search, so that may have become a negotiating point as the two sides debated a lower deal price of $50 a share.

Musk likely wanted to retain flexibility, so sticking with the original $54.20 offer may have made more sense for him. Indeed, in the Monday letter renewing his first takeover bid, Musk's lawyers made it clear the billionaire can still pursue any kind of action he wants against Twitter. The letter stated that the renewed $44 billion offer comes "without waiver of or prejudice to any of their rights, including their right to assert the defenses and counterclaims pending in the action."

Twitter disliked Musk's slippery language

Meanwhile, Twitter's side is said to have taken issue with what it deemed slippery language around Musk's debt financing for the deal. If Musk was going to get the discounted price of $50 a share, the company wanted him on the hook to complete the acquisition no matter what his chosen banks and other financiers decided to do.

In an effort to bypass all of this, and with a courtroom trial and a deposition fast approaching, Musk decided to simply offer to buy Twitter on all the terms originally agreed to in the April merger contract, the people familiar with the situation said.

Advertisement

The recent fraught negotiations were alluded to in legal filing on Thursday in Delaware Chancery Court, where Twitter sued Musk in July for deciding to back out of the deal. Musk sought an immediate and open-ended stay of the lawsuit and trial. His lawyers said the trial and case was now effectively "moot" with Musk's renewed full-price offer, and accused Twitter of refusing "to take yes for an answer." Musk could be the owner of Twitter by Oct. 28, if only Twitter would stop holding things up, they said.

Twitter pushed back. It did not trust Musk's word at this point, company lawyers said. If he has renewed commitments from banks financing more than $12 billion he needs to buy Twitter, as he claims to, then the deal should be able to close by Monday, Oct. 10, they insisted.

In the end, Judge Kathleen McCormick, pressed pause on the bickering. She sided with Musk, in agreeing to halt the case, but only until Oct. 28. The next three weeks will be used for Musk and Twitter "to close on the transaction," she said. Should they not be able to come to a settlement, however, a trial will take place sometime in November.

With that, Twitter seemed to walk back its insistence that Musk close the deal by Monday, saying: "We look forward to closing the transaction at $54.20 by October 28th."

Are you a Twitter employee or someone with insight to share? Contact Kali Hays at khays@insider.com, on secure messaging app Signal at 949-280-0267, or through Twitter DM at @hayskali. Reach out using a non-work device.

Advertisement
{{}}