On Tuesday, Twitter Inc. (TWTR.N) published its account about the negotiations of its deal with Elon Musk, showing that he opted to ask questions about the business of the social media company, which he now owns, for $ 44 billion declare the acquisition “on hold”.
The account published in Twitter’s proxy statement, which outlines what shareholders need to know to vote on the deal, paints a picture of Musk in a flurry of making a deal with his “best and final” offer.
Musk negotiated the Twitter deal without due diligence over the weekend of April 23 and April 24, the proxy statement shows.
Since the signing of the deal on April 25, Musk has questioned the accuracy of Twitter’s public filings about spam accounts representing less than 5% of its user base, claiming they have received at least 20 Should be %. This is despite Twitter stating in its filing that the numbers could be higher than expected.
Musk tweeted on Tuesday that Twitter chief executive Parag Agarwal has refused to show evidence for his company’s conjecture and that the deal cannot proceed until he does. Twitter’s proxy statement shows that Musk made no effort to obtain information about the issue for the agreement.
“Mr Musk did not ask to enter into a confidentiality agreement or seek any non-public info regarding Twitter from Twitter,” Twitter said in its proxy statement.
The proxy statement makes no mention of threats Musk has tweeted about not going ahead with the deal if he does not get to the bottom of how many spam accounts are on the platform.
Twitter investors appeared confident that a deal at the agreed-upon price was now out of the question. Twitter shares traded around $37.55 on Tuesday afternoon, a 30% discount from the $54.20 per share deal price.
Musk suggested for the first time at a conference in Miami on Monday that the deal could be done at a lower price, without specifying what that might be. He has yet to inform Twitter that he wants to renegotiate the agreement.
Legal experts have said that Musk is likely to lose out in court if he tries to walk away from the deal. But they say any litigation will likely be protracted and create uncertainty over Twitter’s business. Even companies that have won court over their acquirers have negotiated a financial settlement.
Musk is contractually obligated to pay a breakup fee of $1 billion if he doesn’t complete the deal. Still, Twitter could sue for “exclusive performance” to allow Musk to conclude an agreement and obtain a settlement from him as a result.
Ann Lipton, a professor at Tulane University Law School, said that Musk didn’t ask Twitter for information before signing the deal means he now has to show that the company’s public filings were inaccurate and significant long-term. There were financial issues – a high legal bar.
“Twitter has long said, ‘this is our estimate of spam, but we might be wrong.’ So it’s not clear that they said anything false,” Lipton said.