Twitter shareholders voted to approve Elon Musk’s purchase of the company, weeks ahead of a trial over Musk’s attempt to exit the merger deal. Though a specific vote tally wasn’t available today, multiple news reports said investors backed the Twitter board’s recommendation to approve the $44 billion deal that Musk agreed to in April before changing his mind.
“A majority of Twitter shareholders voted in favor of accepting Musk’s $54.20-a-share offer to acquire the social-networking company, according to a preliminary vote count read on Tuesday,” Bloomberg wrote.
Today’s shareholder vote was the last remaining approval Twitter needed for the Musk deal, but the bigger question is what will happen at the upcoming trial at Delaware Court of Chancery. Twitter sued Musk to force him to complete the deal, and a trial is scheduled to begin on October 17.
Musk owns about 9.2 percent of Twitter stock and wasn’t expected to vote “given that he has alleged that Twitter breached the merger agreement,” The Wall Street Journal wrote. “The agreement requires Mr. Musk to vote his shares in favor of the deal, though his support isn’t crucial if enough other investors back it.”
Twitter stock was up 0.7 percent today despite a big drop in the overall market. Twitter was at $41.70 at closing, and shareholders would receive $54.20 per share if Musk has to complete the purchase.
Today’s “shareholder meeting lasted 7 minutes, with polls open for about 3 minutes,” the Bloomberg article said. “Shareholders could also submit votes for several weeks ahead of the meeting.” News reports before today’s meeting indicated there were already enough votes to approve the merger.
Judge criticized Musk ahead of trial
Musk has tried to exit the merger by claiming Twitter lied about the number of spam bots on its service. Musk has repeatedly complained about the overall number of bots on Twitter but hasn’t disproven Twitter’s specific estimate, which is that less than 5 percent of its monetizable daily active users (mDAU) are spam or fake.
Musk lost some key rulings in the pre-trial phase. His attempt to delay the trial until February 2023 was rejected in July. Last week, Judge Kathaleen McCormick rejected Musk’s newer motion for a four-week delay, writing in her ruling that “even four weeks’ delay would risk further harm to Twitter too great to justify.”
McCormick last week also criticized Musk for failing to provide documents sought by Twitter, writing that “Musk’s own production of text messages revealed glaring deficiencies.” She ordered Musk to produce more documents, noting that Twitter “has born[e] the bulk of the burden of discovery” while “Defendants had less to do but still fell short in their obligations.”
A Twitter filing made public yesterday said that gaps in Musk’s production of text messages “are notable because they correspond precisely to the period when Musk apparently developed buyer’s remorse and set into action his scheme to escape the merger agreement.”
More Musk texts made public
It’s clear that Musk’s document “production was incomplete because other parties have produced messages to and from Musk during this time period that Musk should have produced,” Twitter wrote. That includes texts between Musk and Morgan Stanley’s head of global technology investment banking, Michael Grimes, which were produced by Morgan Stanley.
Those messages show that on May 8, Musk wrote to Grimes that he was thinking of exiting the merger agreement due to the possibility of “World War III.” About a half hour later, according to Twitter’s newly public filing, Musk wrote to Grimes that “An extremely fundamental due diligence item is understanding exactly how Twitter confirms that 95% of their daily active users are both real people and not double-counted.”
“If that number is more like 50% or lower, which is what I would guess based on my feed, then they have been fundamentally misrepresenting the value of Twitter to advertisers and investors,” Musk wrote to Grimes. “To be super clear, this deal moves forward if it passes due diligence, but obviously not if there are massive gaping issues.”
Twitter’s filing said these messages came weeks after Musk “expressly disclaimed any diligence before signing and agreeing to a no-diligence merger.”