Twitter: We are NOT Altering the Terms of the Deal

(Photo: Brett Jordan/Unsplash)The drama surrounding Elon Musk’s attempt to purchase Twitter has now taken on the form of a reality show. First he just wanted shares in the company, then he wanted the whole company. Then the company didn’t want him to buy it, then it did. Back and forth they went, before they finally came to an agreement. Now that there’s a contract in place, Elon seems to be getting cold feet. To hear Musk say it the deal’s terms don’t apply as the company wasn’t honest with him about the number of bots on the platform. To hear the board say it though, that doesn’t matter; Elon still has to pay up at the original price of the agreement. And he should pray they don’t…you get the idea.

For a brief recap, the terms of the deal between Musk and Twitter were as follows. On April 25th it was announced the parties had struck a deal that would allow Musk to own 100 percent of Twitter. All he had to do was pay $54.20 for every share of Twitter stock, which totaled around $44 billion. Elon lined up financing for the deal, and the board approved it. Next, Elon threw a wrench into the works.

For some reason, Elon came up with the idea that 20 percent of Twitter accounts were bots. This caused him to ask the Twitter CEO to verify its bot count. This caused Twitter’s CEO to explain in detail how it handles bots on its platform. He posted a lengthy blog post about the thorny issue, and also a tweet thread about confronting spam. This did not satisfy Elon, as he said the CEO couldn’t prove that it was five percent, as the company had previously stated. Therefore, the deal was off, according to Elon. “My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does,” he tweeted.

This caused the company’s board of directors to respond. In a proxy statement filed with the SEC, the board says it’s planning on moving ahead with the deal despite his concerns. It bluntly stated, “Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable.” CNN obtained a statement from Twitter’s board saying it’s time for Elon to get out his check book. “The Board and Mr. Musk agreed to a transaction at $54.20 per share. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement,” read the statement. This seems like a blatant legal threat to Elon if he tries to walk away from the deal as-written.

Industry analysts have opined that Musk’s belly aching about bots is an attempt by him to lower the purchase price. Although Musk’s $54.20 per share offer was generous in April, it’s extremely generous now as the stock has fallen quite a bit since the heady days of early April when Musk purchased nine percent of Twitter’s stock. Whether or not Elon will go through with the deal in its current form remains to be seen. For now the ball is in his court.

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