Shares of Twitter surged on the news, rising more than 12.7% before being halted for volatility. The stock continued to climb when it resumed trading at roughly 3:30 p.m. EST, ending the day up 22%.
Musk confidentially filed a letter in Delaware Chancery Court earlier Tuesday seeking to proceed with the deal on its original terms. The about-face comes just days before Musk was scheduled to be deposed by Twitter's lawyers in the company's lawsuit seeking to force the Tesla CEO to buy the company.
In its securities filing, Twitter posted Musk's letter saying that he, the social network, and Musk's holding companies created to facilitate the merger "intend to proceed to closing of the transaction" originally reached back on April 25, 2022.
In the letter, Musk agreed to go through with the original deal as long as he received the financing he originally secured — and as long as the court adjourns Twitter’s case against him. The Tesla CEO didn't admit any liability.
"We received the letter from the Musk parties which they have filed with the SEC," a Twitter spokesperson said in an email to Yahoo Finance. "The intention of the company is to close the transaction at $54.20 per share."
Musk initially agreed to buy Twitter in April for $54.20 per share, but soon pulled out of the deal on July 8, claiming that Twitter wasn't providing enough information about the number of fake accounts on the platform. Twitter struck back against Musk just four days later, filing a lawsuit in Delaware Chancery Court with the hopes that Musk would be forced to buy the company.
It's possible that Musk reversed course yet again because his lawyers anticipated he'd lose that lawsuit.
"Musk is finally listening to his lawyers. He will be a fool to not at least try to buy the company now and avoid being deposed during trial," Anat Alon-Beck, assistant professor of law at Case Western Reserve University's School of Law, told Yahoo Finance.
In its lawsuit, Twitter said that Musk's purported concern about fake accounts was just a pretext for backing out of the deal as the stock market started to turn sour. Indeed, Musk had expressed concern over the issue long before backing out of the deal, according to text messages that became public last week as part of Twitter's lawsuit.
Fake accounts, also known as bots, can spread misinformation and scare off advertisers, who want to sell ads to real people. Musk told a Twitter board member back in April — before he agreed to buy Twitter — that "drastic" action was necessary to tackle bots, according to the newly released text messages.
“This is hard to do as a public company, as purging fake users will make the numbers look terrible, so restructuring should be done as a private company,” he said.
“This is Jack’s opinion too,” Musk said, referring to Twitter co-founder and former CEO Jack Dorsey.
According to University of Iowa law professor Robert Miller, Musk should have no problem tapping the $12.5 billion in debt financing originally committed by Morgan Stanley.
"There was really no way for Morgan Stanley to get out," Miller said.
Twitter's shareholders approved the sale to Musk during a special shareholders meeting in September, meaning that as long as Twitter agrees to go ahead with Musk, he'll soon take control of the social media platform.
How exactly Musk will govern Twitter, though, is an open question. In the past, Musk has said that he wants the site to be less aggressive with moderation, and to restore accounts of banned users such as former president Donald Trump. He also discussed moving away from an advertising model and taking the company private to deal with bots.
But cutting back on moderation could have severe consequences for Twitter. Users may no longer use the service if it is overrun with objectionable content. Advertisers, meanwhile, could pull out of buying ads on the platform out of fear of their products appearing next to disinformation or misinformation.
Twitter's business has suffered alongside its social media peers in recent weeks. In the second quarter, the company missed analysts' expectations on revenue and earnings per share, blaming both macroeconomic conditions and Musk's decision to renege on the deal.
This story was updated to reflect Twitter's amended filing with the SEC.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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