Twitter Files Preliminary Proxy Statement for Acquisition by Elon Musk

There has been a lot of drama since Elon Musk decided to acquire Twitter. This has led to Twitter filing a preliminary proxy statement for acquisition by Elon Musk. It was posted in a press release on May 17, 2022, on PRNewswire.

Twitter Inc. today announced that it has filed its preliminary proxy statement with the U.S. Securities and Exchange Commission in connection with the previously announced agreement for Twitter to be acquired by affiliates of Elon Musk for $54.20 per share in cash.

Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable.

The preliminary proxy statement contains important information including the background of, and reasons for, Twitter’s transaction with Mr. Musk.

The transaction is subject to the approval of Twitter stockholders, the receipt if applicable regulatory approvals, and the satisfaction of other customary closing conditions, and is expected to close in 2022.

On May 16, 2022: CEO of Twitter Parag Agrawal tweeted a lengthy thread that started with “Let’s talk about spam. And let’s do so with the benefit of data, facts, and context…”

The thread continued with: “First, let me state the obvious: spam harms the experience for real people on Twitter, and therefore can harm our business. As such, we are strongly incentivized to detect and remove as much spam as we possibly can, every single day. Anyone who suggests otherwise is just wrong.”…

Axios reported that Elon Musk responded to Parag Agrawal’s thread with a poop emoji.

Axios also posted a screenshot of a tweet from Elon Musk in which he wrote: “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of the <5%. This deal cannot move forward until he does.”

According to Axios, analysts believe Musk is using allegations that Twitter’s user base has more bots than the company claims to either back out of the deal or negotiate down a price, especially now that Twitter’s stock price has plummeted amid a broader market downturn.

What’s really going on? Matt Levine at Bloomberg offered some potential possibilities in a post titled: “Elon Musk Does Not Care About Spam Bots”. From the article:

“…I think it is important to be clear here that Musk is lying. The spam bots are not why he is backing away from the deal, as you can tell from the fact that the spam bots are why he did the deal. He has produced no evidence at all that Twitter’s estimates are wrong, and certainly not that they are materially wrong or made in bad faith. (Musk can only get out of the deal if Twitter’s filings are wrong in a way that would cause a “material adverse effect on Twitter, which is vanishingly unlikely)”…

According to Matt Levine, “…Twitter has published the same qualified estimate – that fewer than 5% of monetizable accounts are fake – for the last eight years. Musk knew those estimates, and declined to do any nonpublic due diligence before signing the merger agreement. He knew about the spam bot problem before signing the merger, as we know, because he talked about it constantly while announcing the merger agreement

In addition, Matt Levine wrote: “What has happened in the last three weeks? Well, the prices of stocks have gone down, making the $54.20 price that Musk agreed to look a bit rich….”

In my opinion, Elon Musk is having a very expensive temper tantrum because of the reasons Matt Levine explained in his article. It’s not a good look, especially for someone as rich as Elon Musk is. To me, it sounds like Elon Musk is having “buyers remorse” about his decision to buy Twitter.