Twitter announced the status of negotiations with Tesla CEO Elon Musk on an acquisition transaction. The company said in its proxy statement that Musk did not ask Twitter for more information when he signed the acquisition agreement.
In the proxy statement, Twitter outlined details that shareholders need to know before voting on the deal, painting a scene in which Musk is eager to seal the deal with his “best and final offer.” Musk negotiated the deal with Twitter on April 23 and 24 without conducting any due diligence.
But since signing the agreement on April 25, Musk has questioned the accuracy of Twitter’s numbers of fake and spam accounts in its earnings report. Twitter admits that these accounts make up less than 5% of its daily active users, but Musk believes at least 20%. Although Twitter has also warned in its filing that the actual number may be higher than its estimates.
Independent researchers predict that 9 to 15 percent of Twitter accounts are chatbots, not real people. Twitter CEO Parag Agrawal declined to provide evidence for the company’s estimates, Musk tweeted on Tuesday. The deal cannot go forward until he presents evidence. But Twitter’s proxy statement shows that Musk did not verify the data in the lead-up to the deal.
“Musk did not request a non-disclosure agreement, nor did he seek any non-public information from Twitter about the platform,” Twitter said in its proxy statement, which also did not mention Musk’s threat on Twitter. , i.e., if he cannot find out how many fake accounts are on the platform, he will not proceed with the transaction.
Investors on Twitter seem convinced that a deal at the agreed price is now impossible. Twitter shares rose to $37.55 on Tuesday afternoon but still traded at a more than 30% discount to the negotiated takeover price of $54.2 per share.
Musk said for the first time at a conference in Miami on Monday that the deal could be done at a lower price, without giving a specific explanation. He has also not notified Twitter if he wants to renegotiate the deal.
Under the contract, Musk would be forced to pay a $1 billion breakup fee if he pulled out of the deal. At the same time, Twitter could also sue Musk, demanding that he fulfill its obligations to force him to complete the deal.
Ann Lipton, a professor at Tulane University School of Law, said Musk didn’t ask Twitter for any information before signing the agreement, which means he now has to prove the company’s public filings are in error and constitute a significant long-term financial problems. However, achieving this goal is quite challenging.
Twitter said on Tuesday that it remained committed to closing the deal at an agreed price, which it expects to close in 2022.