Twitter shareholders are expected to vote on the billionaire in Septemberbuying the influential social network after trying to back out of the deal.
Twitter has scheduled a meeting for shareholders to vote on the proposal for September 13 at 10:00 a.m., according to a regulatory filing on Tuesday. The company’s board of directors is urging shareholders to approve the deal.
“We are committed to closing the merger on the price and terms agreed upon with Mr. Musk. Your vote at the special meeting is critical to our ability to complete the merger,” the filing said. Under the deal, shareholders will receive $54.20 in cash for each Twitter share they own.
Twitter and Musk are currently intertwinedbecause the billionaire said in July that he no longer wants to buy Twitter and take the company private. Musk’s attempt to back out of acquiring the social media site has raised concerns about Twitter’s future.
That’s an important metric for understanding Twitter’s ad business, Musk said, until we get evidence that less than 5% of Twitter’s 229 million daily users in the first quarter were fake or spam-focused. But Twitter claims in its lawsuit against Musk that the billionaire is trying to get out of the deal because of his declining personal wealth, which is why the buyout has become more expensive for him.
Here’s what you need to know about the ongoing saga between Musk and Twitter:
Why is Musk trying to stop the deal?
Musk, who heads Tesla and Space X, said at the TED2022 conference that he doesn’t care about the “economics” of buying Twitter, but he has concerns about the future of Twitter’s business.
The lawsuit, filed by Musk’s attorney, alleges that Twitter breached parts of its contract with Musk, citing data the company allegedly did not provide to the billionaire, including estimates of the social network’s daily users. Twitter makes most of its money from ad sales, so the number of people who can see ads is an important metric for the company.
“This information is fundamental to Twitter’s business and financial performance and is necessary to complete the transactions contemplated by the Merger Agreement, to ensure that Twitter satisfies the closing conditions, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to plan the transition for the business.” to be busy”, the letter says.
The company’s stock price has fallen since Musk’s deal with Twitter, amid fears of a potential recession. Twitter has fired key executives, frozen hiring and laid off about 30% of its talent acquisition team.
Twitter isn’t buying Musk’s explanation, claiming its data requests were “designed to try to stop the deal.”
Why did Musk want to buy Twitter in the first place?
Musk is an avid user of the service, but also one of its most vocal critics.
In March, Musk polled his Twitter followers asking whether users believed Twitter protected free speech. He said the results of the poll, in which nearly 70% of the 2 million respondents said no, would be “very important”.
“Given that Twitter serves as a de facto public town square, failure to adhere to free speech principles undermines democracy. What should be done?” Musk said in his next tweet. He then proposed to buy Twitter, noting that he believed Twitter needed to be private in order to achieve its goal.
The US Constitution’s First Amendment guarantee of free speech applies to government censoring speech, but not to companies like Twitter. Rules about what is not allowed on their sites.
Musk again invoked freedom of speech when Twitter announced the deal in April. He also said he wanted to improve Twitter with new features and promised to open source the service’s algorithms, defeat spam bots and authenticate all people.
“Twitter has huge potential,” Musk wrote. “I look forward to working with the company and the user community to unlock it.”
Progressives criticize social media companies for failing to crack down on harmful content such as hate speech and harassment. Conservatives claim their speech is censored. (Twitter has long denied allegations that it censors conservatives.)
On April 19 Musk tweeted he thinks social media politics “would be better if the extreme 10% on the right and the left were equally unhappy.” He also said he would lift the ban After the January 6 riots on Capitol Hill, he was kicked off the platform for fear of inciting violence. Trump said he has no plans to return to Twitter even if the company lifts the ban.
What was Twitter’s response?
Twitter says closing the deal is in the best interests of shareholders.
At first, it looked like Twitter would reject the offer, but when Musk offered details on how he would finance the deal, the board began to take it more seriously. The company had adopted a defensive strategy known as a “poison pill” that would make it difficult for Musk to add to his stake in the company. This tactic allowed Twitter to accept a competing offer if it emerged.
Co-founder of Twitter Jack Dorsey On April 15, he wrote on Twitter that “as a public company, twitter has always been ‘for sale’. That’s the real issue.” As a public company, Twitter has dealt with leadership changes, layoffs, and activist investors. After Twitter announced the deal, Dorsey never said anything. said he doesn’t believe anyone should own or run Twitter, but that taking it back from Wall Street is “the right first step.”
“Elon solving the problem of this being a company is the only solution I trust,” Dorsey tweeted. “I believe in his mission to extend the light of consciousness.”
A filing with the US Securities and Exchange Commission also sheds more light on how the deal came together. In March, Musk spoke with Twitter co-founder Jack Dorsey about the future of social media and the decentralization of social media to give users more control over their data and the content they see.
Musk’s attempt to acquire Twitter failed. Musk turned down a seat on Twitter’s board before proposing to take the company private. Musk also spoke with Dorsey in early April, and Dorsey said he thought publicly traded Twitter would be better off as a private company.
How did Musk plan to pay for Twitter?
Even for Musk, who is worth an estimated $220 billion, buying Twitter requires some financial juggling.
In an initial SEC filing on April 20, Musk said he personally committed about $21 billion in equity financing. It also secured approximately $25.5 billion in debt financing through Morgan Stanley and other financial institutions.
Since then, Musk has raised capital by selling $8.5 billion in Tesla stock, likely for the deal, and raised $7.1 billion from outside investors. Those investors include Sequoia Capital and Oracle co-founder Larry Ellison, according to reports on May 4. (Ellison sits on Tesla’s board of directors.) Saudi Arabian investor Prince Alwaleed bin Talal Bin Abdulaziz Alsaud also agreed to pledge about 35 million shares in the deal.
On May 24, Musk promised more involvement in the deal. Now it is willing to put up $33.5 billion for the acquisition.
What will happen next?
Twitter shareholders are scheduled to vote on the deal at a special meeting in September. Meanwhile, Twitter is asking the Delaware Supreme Court to enforce the settlement with Musk. The trial is expected to be held over five days in October. According to an April 25 filing by the SEC, canceling the deal could cost Musk as much as $1 billion in termination fees that are part of the deal.