Twitter buyout case heads to court as investors nod $44 bn deal

Amid a legal battle that is yet to fully start, Twitter's shareholders have given their nods to sell the microblogging platform to Tesla chief Elon Musk for a $44 billion deal.

During a conference call with shareholders from the company's headquarters in San Francisco, Twitter said enough votes were cast to approve the deal with the billionaire’s parties.

Musk proposed to buy Twitter in April. While he backed out in July citing Twitter's inability to share exact number of bot accounts on the platform, Twitter continues its earlier stand and has encouraged its shareholders to accept the offer, so it can enforce the deal on Musk in a court of law and close the acquisition.

Boosted by the development, the Twitter share closed 0.65% up at $41.74 on the New York Stock Exchange on Tuesday, in an otherwise weak broader market.

In an SEC filing on September 12, 2022, Twitter said on September 9 Twitter received a third notice of purported termination of the merger agreement from Musk.

In response, Twitter says: "As was the case with each of your prior purported terminations, the Musk Parties' third purported termination is invalid for the independent reason that Mr. Musk and the other Musk Parties continue to knowingly, intentionally, willfully, and materially breach the Agreement."

Twitter says it will enforce the agreement and close the deal on the price and terms agreed upon with the Musk parties.

The social media giant says it has breached none of its representations or obligations under the agreement. "Following the receipt of the approval of Twitter’s stockholders at its September 13, 2022, special meeting, all of the conditions precedent to the closing of the merger will be satisfied (other than those conditions that by their nature are to be satisfied at closing)."

Demanding Musk and his parties comply with their obligations under the agreement, the company says the deal will not be terminated, and the bank debt commitment and equity commitment letter remain in effect.

The approval of the deal by shareholders means Twitter is going ahead with its legal battle with the Musk parties in the Delaware Court of Chancery, where the trial in the case will start on October 17.

To add fuel to the fire, a whistleblower named Peiter Zatko, who served as the former security chief at Twitter, earlier levelled allegations against Twitter by raising major security lapses and concerns related to spam accounts in his 84-page complaint. In his testimony in the US Senate, Zatko on Tuesday testified that Twitter was "misleading the public" on the security matter.

Musk had decided to back out of the $44 billion April-25 deal in July, citing Twitter's inability to reveal the actual number of fake accounts, which prompted the social media company to sue him. Twitter, meanwhile, won its first major battle against the billionaire by succeeding in persuading the court to start an early trial in the takeover deal case. The Delaware judge ruled in favour of Twitter by choosing a trial date closer to the one proposed by it, in October, not February as was requested by Musk.

The case pertains to a proposal by the world’s richest man Musk who, acting through and with his solely-owned entities, Parent and Acquisition Sub, had agreed to buy Twitter for $54.20 per share in cash, for a total of about $44 billion. The share price, amid the global selloff and uncertainty about the revival, has dropped to $41.74 now.

The agreed price, presented by Musk on a take-it-or-leave-it basis in an unsolicited public offer, represented a 38% premium over Twitter’s unaffected share price. Musk had personally committed $33.5 billion to fulfil the deal. On July 8, 2022, Musk ended the $44-billion deal abruptly, accusing Twitter of failing to provide information on bot accounts.