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The Street
The Street
Business
Ellen Chang

Twitter Shareholders Approve $44 Billion Musk Acquisition

Twitter shareholders gave the go head on Sept. 13 for Tesla CEO Elon Musk to acquire the social media platform and take it private, but the deal could still fall apart in a legal battle this fall.

Shareholders voted for the $44 billlion bid by Musk, who is attempting to back out of the deal.

Twitter has sued Musk for breaking the agreement, leading to a five-day trial in Delaware Chancery Court that is slated to start on Oct. 17 unless the two parties reach an agreement before then. 

Musk has cast doubt on the number of fake accounts on Twitter, claiming the company was not as transparent in the number it reported.

Twitter has said that less than 5% of monetizable daily active users were either fake or spam. The company said it provided Musk with enough data and details to meet the deal's requirements.

Musk attempted to add whistleblower allegations to support his disputed takeover of the social media company. He was granted the request on Sept. 6 by Chancellor Kathaleen McCormick of the Delaware Chancery.

"Twitter has represented that the anticipated risk of harm has materialized over the course of this litigation," Chancellor McCormick wrote. "Twitter 'has suffered increased employee attrition' which 'undermines the company's ability to pursue its operation goals."

Musk's attempt to delay the October trial was denied during the hearing.

Musk Has a Rocky History With Twitter

The saga of Musk's bid for Twitter began in April when Musk revealed in a Securities and Exchange Commission Form 13G that he had acquired a 9.2% stake in Twitter. 

On April 14 he made a takeover bid for Twitter at $54.20 a share, which was a 38% premium to Twitter's stock price.

Twitter's board then voted to adopt a poison pill allowing current shareholders to buy shares at a discount, but by April 25, the company had reversed course and accepted Musk's offer.

Musk appeared to be pleased with the board's vote and worked to secure outside funding for the proposed deal since most of his net worth was tied up in Tesla shares.

He worked to reassure shareholders and investors on May 26 by announcing that he had closed out his margin loans linked to Tesla shares. Musk also pledged another $6.25 billion in equity to fund the takeover.

A couple of weeks before announcing the financing for the deal, Musk said that the deal was "temporarily on hold" on May 13.

This was first time that he mentioned Twitter's own stats on fake accounts.

"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," Musk said.

Musk has continued to focus on Twitter's self-reported percentage of fake users. He withdrew his offer on July 8 saying the deal should be canceled because of disagreements about the number of spam bots, or fake accounts, on the platform, according to a SEC filing.

By July 12, Twitter chose to sue the billionaire to enforce the original merger agreement.

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