Elon Musk discussed taking Twitter private with the social media company’s board for more than a week before his initial 9.2% stake was publicly disclosed as passive, new regulatory filings show.
Documents released by Twitter on Tuesday outline the timing of Musk’s efforts to acquire the social media company, detailing how the billionaire has been in talks for days to join the board and began discussing the acquisition as early as March 27. matter.
Musk said on April 4 that he has become Twitter’s largest shareholder and intends to become a passive investor. A day later, he revised the filing to reflect that he was an active investor.
Investors holding more than 5% of a public company’s shares must disclose their holdings to inform other shareholders that they may seek to control or influence the company. Musk did not immediately respond to a request for comment.
The $44 billion deal “cannot move forward” on Tuesday after Musk mocked Twitter’s chief executive Parag Agrawal and said the deal “cannot go forward” without further clarity on the scale of its fake account problem. The future hangs in the balance.
20% of fake/spam accounts, while 4x what Twitter claims, could be *much higher*.
My quotations are based on Twitter’s filings with the SEC and are accurate.
Yesterday, Twitter’s CEO publicly refused to show <5% evidence.
Unless he does, the deal cannot go forward.
— Elon Musk (@elonmusk) May 17, 2022
Musk on Monday expressed doubts about closing the deal at $54.20 a share, saying it was “not impossible” to execute the deal at a lower price.
Twitter insisted on Tuesday that it would force Musk to pay the agreed-upon $54.20, saying: “Twitter is committed to closing the deal at the agreed-upon price.”
The merger agreement requires Musk to fund his equity commitments and to close the deal if all other closing conditions are met, with the potential for a lawsuit between Musk and Twitter if Tesla’s CEO decides not to comply. Musk will owe $1 billion in termination fees if the deal falls apart for other reasons.
Shares in Twitter, which had already traded below Musk’s offer, fell sharply after the billionaire admitted the takeover could fail. Shares in the group closed down 8 percent at $37.39 on Monday, after falling a further 2 percent in premarket trading on Tuesday.
The new filing also details conversations Musk had with Twitter co-founder Jack Dorsey ahead of the $44 billion takeover offer.
The two billionaires were friends and the conversation first took place on March 26, when Musk contacted Dorsey to discuss the company’s future, documents show. That was days before he disclosed his stake.
Dorsey told Musk on April 5 that “Twitter as a private company will be better able to focus on execution,” according to the Twitter filing. Four days later, Musk pulled out of plans to join Twitter’s board, telling its directors instead that he would make a proposal to take it private.
Agrawal is entitled to $60 million if it is involuntarily terminated after the deal closes, while Twitter CFO Ned Segal can receive $46 million through a “golden parachute,” according to the Tuesday filing.
Goldman Sachs will earn $80 million from advising Twitter and JPMorgan Chase will earn $53 million, according to the company’s filings.