The price of Twitter rose by as much as 3% on May 19 after the company executives reportedly told staff that the $44-billion deal to sell the firm to billionaire Elon Musk remains on track and that the agreed-upon price of $54.20 per share will not be renegotiated.
This is despite Musk’s recent tweets indicating he placed the acquisition “on hold” while assessing the number of bot accounts on the site.
According to Twitter, roughly 5% of its accounts are bogus, while Musk estimates the percentage is closer to 20%.
However, according to Bloomberg, Twitter’s chief lawyer, Vijaya Gadde, informed staff during the meeting that “there is no such thing as a deal being on hold”.
Other top Twitter executives, including CEO Parag Agrawal and finance head Ned Segal, spoke to the staff too.
Following Twitter’s submission of its proxy statement with the Securities and Exchange Commission this week, which explained the transaction’s history and terms, the companywide video call was designed for leadership to discuss the acquisition and provide more specifics.
Several worries about the deal were addressed by executives, including if Twitter would try to legally compel Musk to buy the firm based on his agreement.
Gadde reassured employees that Musk must “do everything he can” to get his funding in order and that Twitter may try to “enforce” the terms of the arrangement if it is ever required to do so in the court, but getting to that point would be “pretty rare”.
However, given that Tesla’s market worth has plummeted by more than $400 billion due to the market downturn, Musk may wish to cut the purchase price. He intends to use more than $10 billion of his Tesla stock as security to secure financing for the purchase of Twitter.
It should be understood that Musk would owe Twitter $1-billion in breakup costs if he walked away from the deal, which would be tough because he signed a contract.
The Tesla CEO could be attempting to avoid paying the separation fee by claiming that Twitter has more bots than it previously stated.
But the microblogging platform appears to be adamant that Musk would buy the company for the agreed-upon price.
While Twitter has remained committed to closing the deal, the stock market does not believe it will happen, owing to the wide difference between the agreed-upon purchase price and the current price of Twitter’s stock.
Shares were 30% lower on May 19 than the $54.20 sale price.
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