Twitter’s board wants shareholders to approve the deal with Musk

The board of directors of Twitter Inc. unanimously recommended that shareholders approve Elon Musk’s offer to take the social media company private in a $ 44 billion (R 702 billion) deal eight days before the expected date for the vote and as the billionaire entrepreneur seems to want to support or renegotiate his offer.

On Monday, Musk launched the idea of ​​trying to lower his initial offer by $ 54.20 per share, saying a deal at a lower price would not be “out of the question”.

The billionaire entrepreneur is raising concerns about Twitter’s publicly disclosed data on the percentage of spam and fake accounts on its social media service, claiming they make up more than 20% of all users.

On Tuesday, Musk said he would only take his offer forward if Twitter were able to prove the number is less than the 5% reported by the social media company.

In its proxy statement, Twitter said it “undertakes to complete the transaction at the agreed price and terms as soon as possible.”

The board revealed all relevant details relating to Musk’s offer, including how he intends to fund the purchase, the behind-the-scenes events between the billionaire entrepreneur and Twitter’s executive leadership that led up to the offer, and what will happen to the shares. held by Twitter employees and executives if the offer is finalized.

The board cited a number of factors that influenced its decision to recommend shareholders to approve the deal, including an improvement in Twitter’s competitive positioning and prospects should it become an independent company, and the board’s belief that the agreement has a high level of closure certainty.

The board also listed several risks associated with Twitter’s business model should it remain a corporation, such as the challenge of “making investments, operational changes and improvements (including significant cost reductions) to achieve long-term growth and profitability.” and “the historical challenges to Twitter’s ability to increase its advertising revenues”.

The filing went on to say that none of the possible strategic alternatives to the merger would likely present better opportunities for Twitter to create greater value for its shareholders.

The US Securities and Exchange Commission will review the deal, although the regulatory agency generally does not have the power to stop corporate mergers or engage in private transactions, and shareholders will vote on approval at Twitter’s Annual Shareholders’ Meeting on May 25. .

The proxy statement is key to getting Twitter shareholders to vote yes as it provides far more information than previously available.

U.S. antitrust regulators are also expected to probe Musk’s purchase of Twitter, but they are unlikely to sue to block it because Musk, who is the chief executive officer of Tesla Inc. and Space Exploration Technologies Corp., is a fledgling. competitor in the social media industry.

Twitter told its employees on April 25 that the deal is expected to close in another three to six months.

But Musk created an air of uncertainty last Friday with a morning tweet saying the deal to take private Twitter was “temporarily suspended” until he receives more information on the proportion of fake accounts on the social media site. connecting to a Reuters report dated May 2 on Twitter’s most recent disclosure about the number of bots on the platform.

Despite his public comments, the deal deal doesn’t seem to give Musk much room to walk away. The merger agreement stipulates that he would have owed Twitter a $ 1 billion breakup fee if he canceled the deal.

The deal also gives Twitter the right to force Musk to close the deal as long as his debt financing is available. Twitter also has the right to go to court to force Musk to try and get that debt financing.

Shares of Twitter fell on speculation that the deal is falling apart. The stock is now 31% below the price Musk contractually agreed to pay, closing Monday at its lowest level since March 17.


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