Twitter Inc released its account of its negotiations with Elon Musk on Tuesday, showing that it chose not to ask the questions about the social media company’s activities that it has now cited in stating that the acquisition of 44 billion dollars was “on hold”. The account, posted in Twitter’s proxy statement that outlines what shareholders need to know to vote on the deal, paints a picture of Musk in a hurry to strike a deal with his “best and final” offer.
Musk brokered the Twitter deal over the weekend of April 23-24 without doing due diligence, the proxy statement said. Since signing the agreement on April 25, Musk has questioned the accuracy of Twitter’s public records regarding spam accounts representing less than 5% of its user base, saying they must represent at least 20. %. This is despite Twitter saying in its docs that the numbers could be higher than it estimates.
Independent researchers have estimated that 9-15% of millions of Twitter profiles are bots. Musk tweeted on Tuesday that Twitter chief executive Parag Agrawal refused to show proof of his company’s estimate and that the deal could not move forward until he did. Twitter’s proxy statement shows that in the run-up to the deal, Musk made no effort to obtain information about the issue.
“Mr. Musk has not requested to enter into a confidentiality agreement or asked Twitter for any non-public information regarding Twitter,” Twitter said in its proxy statement. The proxy statement makes no mention of threats Musk tweeted about not continuing with the deal if he fails to find out the number of spam accounts on the platform.
Twitter investors seemed confident that a deal at the agreed price was now out of the question. Twitter shares were trading around $37.55 on Tuesday afternoon, a discount of more than 30% from the price of $54.20 per share. Musk first suggested Monday at a conference in Miami that the deal could be done at a lower price, without specifying what that might be. He has yet to tell Twitter that he wants to renegotiate the deal.
Legal experts have said Musk is likely to lose in court if he tries to walk away from a deal. But they say any litigation would likely be protracted and cast uncertainty over Twitter’s business. Even companies that have prevailed in court over their acquirers have ended up negotiating financial settlements. Musk is contractually obligated to pay a $1 billion severance fee if he doesn’t complete the deal, but Twitter may sue for ‘specific performance’ to force Musk into a deal and get a settlement from his go.
Ann Lipton, a professor at Tulane University School of Law, said the fact that Musk did not request information from Twitter before signing the deal meant he would now have to show that the public documents of the company were wrong and posed significant long-term financial problems – a legal high bar. “Twitter has long said ‘this is our spam estimate, but we could be wrong.’ So it’s not clear they said anything wrong,” Lipton said.
COMMITTED TO THE DEAL Twitter said on Tuesday it remained committed to the deal at the agreed price and expected it to close in 2022.
The San Francisco-based company said in its proxy statement that Musk expressed interest in joining its board or taking it private on March 26. This would indicate that Musk mislabeled his more than 9% stake in Twitter as passive when he disclosed it in a regulatory filing on April 4. He then clarified that it was an active participation. Representatives for Musk did not respond to requests for comment.
Musk also told Twitter that he was considering launching a competitor, according to the proxy statement. Twitter CEO Agrawal is entitled to a golden parachute of $60.2 million if the deal goes through, while the company’s CFO Ned Segal would receive $46.4 million, according to the power of attorney . Twitter’s top lawyer, Vijaya Gadde, would be paid $30 million.
Goldman Sachs Group Inc is expected to be paid $65 million for advising Twitter after the deal closes, having already received $15 million, the proxy statement said. Another Twitter adviser, JPMorgan Chase & Co, is expected to be paid $48 million once the deal closes, having already paid $5 million for its fairness notice to the company.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)
