Twitter Urges Shareholders to Move Forward With Deal

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As Elon Musk continues to cast doubt on whether his acquisition of Twitter will continue, the social media company is pressing ahead. In a lengthy regulatory filing on Tuesday, Twitter’s board urged shareholders to vote in favor of the deal and provided a play-by-play look into how the board reached an agreement last month with Mr. Musk.

The filing detailed the breakneck pace at which the deal came together and the frequent shifting of Mr. Musk’s whims as he moved from shareholder to board nominee to acquirer. It also showed Twitter’s continued commitment to the deal, even as Mr. Musk appeared hesitant: “This deal cannot move forward,” he tweeted early Tuesday, shortly before the filing was published.

“Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable,” Twitter said in a statement accompanying the filing. The value of Twitter’s stock could decline significantly if the deal does not move forward, Twitter said. Its shares have already fallen below their value when Mr. Musk first revealed his stake in Twitter, and they are now far below the price he is offering in his takeover bid, a signal that investors have doubts that a deal will close.

Twitter’s filing revealed new details about the deal-making negotiations, including the role of Twitter’s co-founder and former chief executive, Jack Dorsey, and Twitter’s conversations with other potential acquirers.

Mr. Dorsey suggested to Mr. Musk that Twitter should be taken private on April 5, shortly after Mr. Musk had agreed to join Twitter’s board, according to the filing. Mr. Musk had acquired a significant stake in Twitter and approached the company with suggestions for changes he believed it should make to its business. Although Mr. Musk said he was considering buying Twitter or launching a competitor, he agreed in late March that he would join the board.

But Mr. Musk’s thinking appeared to shift after the conversation with Mr. Dorsey. The former Twitter executive, who has argued that the social network should decentralize its business, said that Twitter could better execute on its goals and plans if it became private and no longer had to answer to Wall Street. During the discussion, Mr. Musk asked Mr. Dorsey if he would remain on Twitter’s board after his term expired in May. Mr. Dorsey declined, according to the filing.

Shortly after their conversation, Mr. Musk turned down the seat on Twitter’s board and said he would make an offer to acquire the company instead.

Mr. Musk’s bid materialized with unusual speed, and he goaded Twitter’s board to accept it, publicly tweeting hints that he might pursue a hostile takeover attempt if the board did not accept his terms via negotiations.

Behind the scenes, Twitter management and its bankers received interest from other “financial sponsors and institutional investors,” the company said in its filing, but none of the interested parties put forward a specific counterproposal.

Twitter’s board chair, Bret Taylor, also spoke with several of Twitter’s institutional shareholders to gauge their interest in Mr. Musk’s offer, the filing said. These shareholders said Twitter had failed to execute on its past opportunities to grow the business but that the recent replacement of Mr. Dorsey with a new chief executive, Parag Agrawal, could make them open to a plan for Twitter to remain independent. But they also cautioned Twitter to consider Mr. Musk’s proposal, which values the company at $44 billion, against the risks of pressing forward as a public company.

Those risks tipped the scales, Twitter said in its filing. If a deal with Mr. Musk did not solidify, other acquirers could swoop in and propose a lower price. The shares of many tech stocks, including Twitter’s, have slumped recently, making a quick turnaround on the public market more challenging.

In recent days, Mr. Musk has suggested that the presence of bots and spam accounts on Twitter could allow him to back out of the deal or renegotiate its price. Twitter estimates that these accounts make up less than 5 percent of its platform, but Mr. Musk has suggested that the total is far higher. An incorrect bot count could be grounds to give him an out, Mr. Musk said Monday at a conference. But if the deal falls apart, Mr. Musk would need to prove his claims in court in order to avoid paying a $1 billion breakup fee, and the speed at which he put together his bid could hurt his case.

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