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Twitter shares details of Elon Musk deal

May 17, 2022

Twitter has published an account of its deal with Elon Musk suggesting his concerns about "fake users" only arose after setting a price. The Tesla mogul's takeover is not yet complete, with Musk calling it into question.

Musk placed a temporary halt on his much-anticipated deal to buy Twitter
Elon Musk asked no questions about Twitter's business model and user base before closing the dealImage: Muhammed Selim Korkutata / Anadolu Agency/picture alliance

Twitter Inc. published its account of the negotiations of the $44 billion (€42 billion) deal the company closed with Elon Musk after he declared the acquisition to be "on hold."

In Twitter's account of the negotiations, Musk never requested a non-disclosure agreement to prevent the company from talking about the negotiations, nor did he ask any questions about the company's business.

Twitter's proxy statement, published for shareholders to understand and vote on the deal, depicts Musk as in a hurry to conclude the negotiations that took place over the weekend of April 23 and April 24 with his "best and final" offer.

What has Twitter said about dealing with Musk?

Instead of due diligence prior to inking the deal, Musk has instead taken feverishly to Twitter after signing the deal on April 25 to complain about fake users of the social media service and a lack of SEC oversight.

On Tuesday, he tweeted, "Yesterday, Twitter's CEO publicly refused to show proof of <5%" of accounts on the service being "fake/spam accounts." 

He has also questioned the accuracy of the company's public filings and suggested that the number of Twitter's spam accounts is likely closer to 20%.

In its earnings, Twitter has stated the number could be more than 5%. Independent researchers believe the number of bot accounts is between 9% and 15% of all users on the social media platform.

According to the proxy statement published on Tuesday, Musk had not sought information about this issue from Twitter in the run-up to the deal.

"Mr. Musk did not ask to enter into a confidentiality agreement or seek from Twitter any non-public info regarding Twitter," Twitter said in its statement.

What will Elon Musk do with Twitter?

What has the effect been on the Twitter share price?

Twitter shares plunged to around $37.55 on Tuesday afternoon, a haircut of over 30% on the $54.20 per share price when the deal with Musk closed, suggesting that shareholder confidence in the deal price is not there.

On Monday, Musk suggested at a conference that the deal price could come down. He has, however, not formally made that request.

By contrast to Musk's protracted public voicing of doubts since closing the deal, Twitter said it expects everything will go through later this year.

What happens if the deal with Musk does or does not go through?

Musk would have to pay a $1 billion fee for smashing the deal, if he does not go through with it.

However, Twitter could sue for "specific performance" to force Musk to complete a deal and get a settlement from him as a result.

Elon Musk reaches deal to acquire Twitter

If the deal does go through, several people and companies will be made considerably richer.

Parag Agrawal, the CEO of Twitter, would receive $60.2 million, chief financial officer Ned Segal would walk away with $46.4 million and general counsel Vijaya Gadde would get $30 million.

Additionally, upon completion of the deal, Goldman Sachs would make $65 million for advising Twitter, having already received $15 million according to Twitter's proxy statement. JPMorgan Chase would also receive $48 million and has already made $5 million for a fairness opinion to the company.

ar/msh (AFP, AP, Reuters)