Twitter Board Again Urges Shareholders To OK Elon Musk Takeover, But Tesla Chief Warns Of “Unresolved” Issues

Dade Hayes
·4 min read
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Twitter’s board of directors reiterated its call for shareholders to approve the proposed $44 billion acquisition of the firm led by Elon Musk, but the billionaire Tesla CEO separately warned of three “unresolved” issues that are holding up the transaction.

In an SEC filing, Twitter CEO Parag Agrawal and Chairman Bret Taylor both urged shareholders to vote in favor of the deal in an upcoming special meeting. They noted that shareholders would receive $54.20 for each share of Twitter stock they own. After news of the filing started to circulate, the stock rose nearly 3% in early trading to around $38.76. It has lost more than 20% of its value since the merger plan was revealed in April, though most tech shares have seen a similar downturn amid worsening economic conditions.

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Meanwhile, Musk offered a decidedly gloomy outlook on the economy in an appearance at the Qatar Economic Forum in Doha. He said a recession “is inevitable at some point,” adding that the a near-term recession is “more likely than not.”

As to the status of the Twitter takeover, which is backed by more than a dozen other investors, Musk flashed a yellow light and indicated that his previously stated concerns about the number of phony “bot” accounts have not been allayed. “There’s a limit to what I can say publicly,” he said. “It is somewhat of a sensitive matter.”

Musk would have to pay a breakup fee of $1 billion if he were to decide to abandon the Twitter deal, but he has already advised Twitter of that possibility. In an SEC filing this morning, Twitter warned shareholders that if the deal does not go through, “the price of our common stock may decline significantly.”

Twitter has said that less than 5% of its account base is comprised of bots, but Musk has pushed back on that claim. “That’s probably not most users’ experience,” he said at the Qatar event, in which he took part virtually.

Along with the bot issue and the outcome of the shareholder vote, the third hurdle to be cleared by the deal is the debt portion of the transaction, Musk told moderator John Micklethwait, editor-in-chief of Bloomberg News.

The current structure of the Twitter deal would have Musk paying $33.5 billion in cash for the company, with other investors pledging $7.1 billion in additional commitments. The balance of the funding will come via a yet-to-be-finalized set of bank loans.

In addition to the financial aspects of the Twitter deal, Musk fielded questions about what stance he would take on the nature of content that would be allowed on the platform. “My ambition for Twitter or for, in general, the digital town square would be that it is as inclusive in the broadest sense of the word as possible,” he said. “That is an appealing system to use.” Eventually, he said, the goal would be to get “80% of North America and half the world” onto Twitter, which would be a steep increase from the current level of 229 million daily active users.

Expanding to a wider audience will require Twitter to avoid being “a place where [people] feel uncomfortable or harassed,” Musk continued. “There’s this big difference between freedom of speech and freedom of reach, in that one can in the United States go to the middle of Times Square and yell pretty much anything you want. You’ll annoy the people around you, but you’re kind of allowed to yell anything you want in a crowded, public place, more or less, apart from, ‘This is a robbery.'”

Users of Twitter, in Musk’s conception of the social network, would express preferences as to what kind of posts they would see on their feed, with “offensive” ones being excluded for those who opt out of seeing them. He did not articulate any plan for how material would be deemed offensive. Twitter, like Facebook and other widely used tech platforms, has struggled with content moderation. In 2020, it implemented a system of flagging tweets but generally hesitated from removing any users from the platform. In January 2021, after the assault on the U.S. Capitol, Twitter banned former president Donald Trump and others over their posts about it, saying they were promoting violence. Musk has strongly implied that Trump and others could be welcomed back if he is able to consummate the transaction.

Micklethwait asked Musk about whether he would back Trump in the 2024 presidential election. “I’m undecided at this point on that election,” Musk said. Last week, the exec said he was strongly considering getting behind Ron DeSantis, Florida’s Republican governor whose policy decisions are aligned with Trump’s.

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