Twitter says Elon Musk signed acquisition deal without due diligence
In the preliminary proxy statement filed with the US Securities and Exchange Commission related to the deal with Elon Musk, Twitter has claimed that Musk had opted out of asking any questions about the company's business. The proxy statement contains information on the background and reasons for the transaction. Musk has recently put his $44 billion acquisition of the microblogging platform on hold.
Why does this story matter?
Did Twitter lie in its SEC filings about bots or is Musk responsible for not completing due diligence before signing the agreement? The former's proxy statement about the deal says that the latter was in haste. If that's the case, Musk's threat about leaving the deal are without any substance. Be that as it may, the Musk-Twitter saga keeps getting interesting for the onlooker.
Musk was in a hurry to complete the deal: Twitter
Musk recently put the deal on hold, challenging Twitter CEO Parag Agrawal to provide calculation of fake/spam accounts, which are estimated by the microblogging platform to be less than 5%. However, Twitter's proxy statement reveals that Musk negotiated the deal without carrying out any due diligence. It also says that he did not "seek any non-public info regarding Twitter."
Twitter's board recommends shareholders to approve the deal
The proxy statement submitted by Twitter contains what shareholders need to know to vote on the deal. In the statement, the company has disclosed all details regarding Musk's offer, behind-the-scenes events, and the reasons for accepting the deal. On May 25, the shareholders will vote on the deal and the board has strongly advised them to approve the bid.
Twitter is committed to the completion of the deal
Musk's non-committal and constant questioning of the deal has sent Twitter's shares plunging. His offer of $54.2/share now seems a lot more than the current price, which is below $40/share. At the All-In Summit 2022, Musk even floated the idea of revising the deal. In the proxy statement, Twitter has said that it is still committed to completing the transaction at the agreed price.
Musk cannot walk out of the deal without serious consequences
Can Musk call off the deal? Despite his comments, the agreement gives him little wiggle room. If he were to cancel the deal, he would owe Twitter a $1 billion breakup fee. The company can also force Musk to complete the deal as long as his debt financing is available. It can also approach a court for specific performance of the contract.
Twitter's board will enforce the merger agreement
As Musk ponders on whether to go through with his Twitter acquisition or ditch the deal, the company's board said, "We intend to close the transaction and enforce the merger agreement."