Twitter Board Recommends Shareholders Vote in Favor of Musk Deal

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Twitter Board Recommends Shareholders Vote in Favor of Musk Deal

Bloomberg — The board of directors of Twitter Inc. (TWTR) has unanimously recommended to shareholders that they approve Elon Musk’s offer to take the social media company private in a $44 billion deal, eight days before the vote is due to take place and while the billionaire businessman appears to be trying to back down or renegotiate his offer.

On Monday, Musk floated the idea of ​​trying to lower his initial offer of $54.20 a share, saying a lower-priced deal would not be “out of the question.” The billionaire businessman is raising questions about the data that Twitter has made public about the percentage of accounts dedicated to sending spam and fake accounts on his social networking serviceclaiming that they make up more than 20% of all users. On Tuesday, Musk said he would only go ahead with his offer if Twitter can prove the figure is less than the 5% the social media company has reported.

In a statement, Twitter said that is “committed to completing the transaction at the agreed price and terms as soon as possible.”

The board of directors disclosed all relevant details related to Musk’s offer, including how he intends to finance the purchase, behind-the-scenes events between the billionaire businessman and Twitter’s executive management leading up to the offer, and what What will happen to the shares held by Twitter employees and executives if the offer goes through.

The board cited a number of factors that influenced its decision to recommend that shareholders approve the transaction.including improving Twitter’s competitive positioning and prospects if it were to become an independent company, and the board’s belief that the transaction has a high level of certainty. The board also listed several risks associated with Twitter’s business model should it remain a public company.such as the challenge of “making investments, changes and operational improvements (including significant cost reductions) to achieve long-term growth and profitability” and “historic challenges to Twitter’s ability to grow its advertising revenue.” The presentation went on to say that none of the possible strategic alternatives to the merger probably presented better opportunities for Twitter to create more value for its shareholders.

The US Securities and Exchange Commission (SEC) will review the deal, though the regulatory agency generally lacks the power to stop corporate mergers or takeovers, and shareholders will vote to approve it. Twitter’s annual shareholder meeting on May 25. Proxy statement is critical to convincing Twitter shareholders to vote yesas it provides much more information than was previously available.

US antitrust regulators are also expected to investigate Musk’s purchase of Twitter.But it’s unlikely they’ll sue to block it because Musk, who is CEO of Tesla Inc. (TSLA) and Space Exploration Technologies Corp., is a nascent player in the social media industry.

Twitter told its employees on April 25 that the deal will close within three to six months.

Nevertheless, Musk created an atmosphere of uncertainty last Friday with an early morning tweet stating that the Twitter privatization deal was “temporarily on hold.” until it received more information on the proportion of fake accounts on the social network, with a link to a May 2 Reuters report on Twitter’s latest information on the number of bots on the platform.

Despite his public comments, the deal’s contract doesn’t appear to give Musk much leeway to drop out. The merger agreement stipulates that Musk will owe Twitter a $1 billion breakup fee if he cancels the deal. The contract 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 to obtain that debt financing.

Twitter shares have been falling on speculation that the deal will unravel. The shares are now 31% below the price Musk has agreed to pay per contract, closing Monday at their lowest level since March 17.

This article was translated by Andrea González

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