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Twitter Shares Surge 22% after Elon Musk Revives Deal to Buy Company

Twitter Shares Surge 22% after Elon Musk Revives Deal to Buy Company

Elon Musk has reversed course and is again proposing to buy Twitter for $54.20 a share, according to a regulatory filing on Tuesday.

Owing to this, Twitter shares climbed more than 22 per cent on the news.

The social media company issued a statement saying it had received the letter.

It added, “The intention of the company is to close the transaction at $54.20 per share.”

A deal could happen as soon as Friday, sources told CNBC. The stock was halted earlier in the day after Bloomberg first reported on the Tesla CEO’s plans to go forth with his deal to acquire the company.

The SEC filing says Musk sent a letter to Twitter on Monday, notifying the company of his intent to proceed with the transaction agreed upon on April 25, the day the deal was publicly announced.

A few weeks after Musk agreed to that deal, valuing Twitter at $44 billion, he quickly tried to back out, officially informing the company in July of his intentions to terminate the agreement.

Twitter sued Musk to force him to go through with the purchase. The two sides were scheduled to go to trial in Delaware Chancery Court on October 17.

Musk alleged that Twitter was misstating the number of “bots” on its service as one of the reasons he was reneging on the deal. He and his lawyers claimed the social media company was misleading investors by providing false numbers in corporate filings with the Securities and Exchange Commission.

Twitter countered, however, that Musk’s assertions of fraud were incorrect and were based on a misunderstanding of the way the company tallies bots and fake accounts on its platform.

Musk also alleged Twitter failed to provide him with the necessary data related to spam and bots, which Twitter denied.

Twitter alleged Musk was looking for a reason to back out of the deal when the company’s shares dropped alongside a broader decline in the overall market.

Although Musk sought to delay the trial date, Delaware Chancellor Kathaleen McCormick rejected his wish citing the potential for Twitter to incur “irreparable harm.” The chancellor did allow Musk and his attorneys to amend their counterclaim to include certain accusations made by Twitter’s former head of security in a separate whistleblower suit against the company.

In September, Twitter shareholders approved Musk’s original bid to purchase the company.

Meanwhile, Tesla shares closed up nearly three per cent for the day.

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