Twitter board unanimously backs Musk’s $44-bn takeover bid

The board of directors of Twitter has granted its unanimous approval to the takeover bid by billionaire Elon Musk, according to a regulatory filing by the social media company. The Tesla CEO had made a $44-billion offer in April to buyout Twitter, a deal which will turn the company into a privately held entity.

A statement addressed to Twitter shareholders — undersigned CEO Parag Agrawal and board chairman Bret Taylor — mentions that the company’s board of directors has “unanimously determined that the merger agreement is advisable and the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Twitter and its stockholders.”

In the filing, Twitter directors unanimously recommended that stockholders vote for the adoption of the merger agreement in the upcoming virtual special meeting. The statement clarifies that Musk’s takeover of Twitter has been referred to as “merger” in the document.

Musk’s offer proposes to pay $54.20 in cash for each share, “without interest and subject to any applicable withholding taxes”. This amount constitutes a premium of approximately 38% to the closing price of our common stock on April 1, 2022, which was the last full trading day before the billionaire disclosed his approximately 9% stake in Twitter.

The statement also recommends stockholders to vote for the compensation that will or may become payable by Twitter to its named executive officers in connection with the merger. Following his offer, Musk had expressed intentions to reduce salaries paid to the board of directors to nil, which he claimed will save Twitter approximately $3 million.

On April 25, Twitter had agreed to be acquired by an affiliate of Musk. X Holdings II, Inc., a wholly owned subsidiary of X Holdings I, Inc., was formed on April 19 to engage in transactions proposed in the merger statement.

Detailing the effects of the acquisition, the latest SEC filing explains that if the merger is approved in the special meeting, X Holdings II will merge with and into Twitter. Following this, the former will cease to exist and Twitter “will continue as the surviving corporation”.

“As a result of the merger, Twitter will cease to be a publicly traded company. If the merger is completed, you will not own any shares of capital stock of the surviving corporation,” the filing tells stockholders.

The takeover will entail an expense of approximately $46.5 billion, including payment of consideration due to the stockholders and holders of equity awards, repayment of all or a portion of Twitter’s outstanding debt, and all other required costs, fees and expenses. These are to be paid by X Holdings I and will be funded with the proceeds of committed equity and debt financing.

The takeover bid had hit a bump after Musk took issue to details shared by Twitter regarding spam and fake accounts on its platform. The microblogging site had claimed in an earlier SEC filing that such ‘bot’ accounts constituted 5% of its monetisable daily active users (mDAU) during the March quarter. Musk, however, made it clear that he does not believe the company's lax testing methodologies are adequate so he must conduct his own analysis.