# Twitter’s account of deal shows Musk signing without asking for more info
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-17
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Elon Musk's Twitter deal negotiations analysed
Meta Description: Discover the inside story of Twitter's $44 billion deal negotiations with Elon Musk. Find out why the acquisition is 'on hold' and what this
URL: https://financedigest.com/twitters-account-of-deal-shows-musk-signing-without-asking-for-more-infohtml

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By Greg Roumeliotis and Tom Hals

(Reuters) – Twitter Inc published its account on Tuesday of its deal negotiations with Elon Musk, showing he opted out of asking the questions about the social media company’s business he has now cited in declaring the $44 billion acquisition is “on hold.”

The account, published in Twitter’s proxy [statement](https://www.financedigest.com/dksh-sells-its-25-stake-in-swiss-luxury-watchmaker-bovet.html) that outlines what shareholders need to know to vote on the deal, paints a picture of Musk in a rush to clinch a deal with his “best and final” offer.

[Musk negotiated the Twitter](https://www.financedigest.com/elon-musk-plans-to-cut-half-of-twitter-jobs-bloomberg-news.html "Elon Musk plans to cut half of Twitter jobs – Bloomberg News") deal over the weekend of April 23 and April 24 without carrying out any due diligence, the proxy statement shows.

Since [signing the deal](https://www.financedigest.com/italys-nexi-signs-digital-payments-deal-with-tims-olivetti.html "Italy’s Nexi signs digital payments deal with TIM’s Olivetti") 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 must be at least 20%. This is [despite Twitter stating in its filings that the numbers could be higher than it estimates](https://www.financedigest.com/recruiter-randstad-beats-q1-earnings-estimates-despite-hiring-slowdown.html "Recruiter Randstad beats Q1 earnings estimates despite hiring slowdown").

Independent researchers have [projected that 9% to 15% of the millions](https://www.financedigest.com/sse-to-invest-122-million-in-scottish-pumped-hydro-project.html "SSE to invest 2 million in Scottish pumped hydro project") of Twitter profiles are bots.

Musk tweeted on Tuesday that Twitter Chief Executive Parag Agrawal has refused to show proof for his company’s [estimate and that the deal](https://www.financedigest.com/yum-beats-sales-estimates-as-customers-flock-to-kfc-taco-bell-deals.html "Yum beats sales estimates as customers flock to KFC, Taco Bell deals") cannot move forward until he does. [Twitter’s proxy statement shows that in the run-up to the deal](https://www.financedigest.com/musks-twitter-deal-could-test-tesla-executive-bench.html "Musk’s Twitter deal could test Tesla executive bench") Musk made no effort to get information about the issue.

“Mr. Musk did not ask to [enter into a confidentiality agreement](https://www.financedigest.com/the-city-of-boise-and-uledger-enter-into-agreement.html "The City of Boise and ULedger Enter Into Agreement") or seek from Twitter any non-public info regarding Twitter,” Twitter said in its proxy statement.

The [proxy](https://www.financedigest.com/how-to-earn-money-selling-sneakers.html) statement makes no mention of threats [Musk has tweeted](https://www.financedigest.com/elon-musk-drops-plans-to-join-twitter-board-deletes-weekend-tweets.html "Elon Musk drops plans to join Twitter board, deletes weekend tweets") 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 convinced that a deal at the [agreed price](https://www.financedigest.com/g7-finance-chiefs-agree-on-russian-oil-price-cap-but-level-not-yet-set.html "G7 finance chiefs agree on Russian oil price cap but level not yet set") was now out of the question. Twitter shares were trading around $37.55 on Tuesday afternoon, a discount of more than 30% to the $54.20 per [share deal](https://www.financedigest.com/u-s-mid-tier-lenders-shares-rise-in-frankfurt-after-svb-deal.html "U.S. mid-tier lenders shares rise in Frankfurt after SVB deal") price.

Musk suggested for the first time on Monday at a conference in Miami that the deal could be done at a [lower price](https://www.financedigest.com/ks-cuts-2023-profit-outlook-on-slow-recovery-lower-potash-prices.html "K+S cuts 2023 profit outlook on slow recovery, lower potash prices"), without specifying what that could be. He has yet to inform Twitter that he wants to renegotiate the deal.

Legal experts have said Musk would likely lose in [court if he tried to walk away](https://www.financedigest.com/finance-industry-one-court-case-away-claims-management-company-onslaught-quadient-warns.html "Finance Industry Is “One Court Case Away” from Claims Management Company Onslaught, Quadient Warns") from a deal. But they [say that any litigation would likely be protracted and cast uncertainty over Twitter’s business](https://www.financedigest.com/exclusive-qatarenergy-boss-says-world-cup-tension-will-not-impact-german-business.html "Exclusive-QatarEnergy boss says World Cup tension will not impact German business"). Even companies that have prevailed in court over their [acquirers have ended up negotiating financial](https://www.financedigest.com/mazars-to-acquire-financial-modelling-consultancy-and-training-provider-corality-financial-group.html "Mazars to acquire financial modelling consultancy and training provider, Corality Financial Group") settlements.

Musk is contractually obligated to pay a $1 [billion break-up fee if he does not complete the deal](https://www.financedigest.com/australias-macquarie-explores-6-billion-deal-for-britains-mg-sky-news-reports.html "Australia’s Macquarie explores billion deal for Britain’s M&G, Sky News reports"), but Twitter can sue for “specific performance” to force Musk to complete a deal and obtain a settlement from him as a result.

Ann Lipton, a professor at Tulane University Law School, said the fact that Musk had not asked Twitter for information before [signing the deal](https://www.financedigest.com/siemens-energy-signs-7-billion-eur-offshore-power-deal-with-tennet.html "Siemens Energy signs 7-billion-eur offshore power deal with TenneT") meant he would now have to show that the company’s public filings were wrong and posed significant long-term 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.

COMMITTED TO THE DEAL

[Twitter said on Tuesday it remained committed to the deal at the agreed price](https://www.financedigest.com/twitter-shares-cruise-towards-musks-offer-price-as-deal-deadline-looms.html "Twitter shares cruise towards Musk’s offer price as deal deadline looms") and expected it to be completed in 2022.

The San Francisco-based company said in its proxy [statement that Musk expressed his interest in joining its board](https://www.financedigest.com/two-thirds-of-iaea-board-backs-western-statement-pressuring-iran.html "Two-thirds of IAEA board backs Western statement pressuring Iran") or taking it private on March 26. This would indicate that Musk mischaracterized his [stake of more than 9% in Twitter as passive when he revealed it in a regulatory filing](https://www.financedigest.com/franklin-resources-has-5-7-adecco-stake-filing.html "Franklin Resources has 5.7% Adecco stake – filing") on April 4. He subsequently clarified it was an active stake.

Representatives of Musk did not respond to requests for comment.

[Musk also told Twitter](https://www.financedigest.com/musk-secures-46-5-billion-in-funding-for-twitter-bid.html "Musk secures .5 billion in funding for Twitter bid") that he contemplated starting a competitor, according to the [proxy](https://www.financedigest.com/how-to-earn-money-selling-sneakers.html) statement.

Twitter’s CEO, Agrawal, is entitled to a $60.2 [million golden parachute if the deal closes](https://www.financedigest.com/optable-closes-20-million-series-a-financing-broadens-investor-syndicate-in-new-round.html "Optable Closes Million Series A Financing, Broadens Investor Syndicate in New Round"), while the company’s chief financial officer, Ned Segal, would get $46.4 million, the proxy shows. Twitter’s top lawyer, Vijaya Gadde, would be paid $30 million.

Goldman Sachs Group Inc stands to be paid $65 [million for advising Twitter once the deal](https://www.financedigest.com/royal-mail-adds-canada-freight-strength-with-287-million-rosneau-deal.html "Royal Mail adds Canada freight strength with 7 million Rosneau deal") is completed, having already been paid $15 million, the [proxy](https://www.financedigest.com/how-to-earn-money-selling-sneakers.html) statement shows.

Another Twitter adviser, JPMorgan Chase & Co, stands to be paid $48 million once the [deal closes](https://www.financedigest.com/greece-britain-discussing-parthenon-sculptures-return-but-deal-not-close-athens-says.html "Greece, Britain discussing Parthenon Sculptures return but deal not close, Athens says"), having already made $5 million for its fairness opinion to the company.

(Reporting by Greg Roumeliotis in New York and Tom Hals in Wilmington, Del.; Editing by Nick Zieminski and Matthew Lewis)


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