Twitter formally recommends €42bn bid even as Elon Musk appears to waver

Twitter said it is 'committed to completing the transaction on the agreed price and terms as promptly as practicable'.

Twitter’s board unanimously recommended that shareholders approve Elon Musk’s bid to take the social media company private in a $44bn (€41.7bn) deal, eight days before they are scheduled to vote and as the billionaire entrepreneur seems to be seeking to back out or renegotiate his offer.

Mr Musk had floated the idea of trying to lower his initial offer of $54.20 a share, saying a deal at a lower price wouldn’t be “out of the question”. The billionaire is raising doubts about Twitter’s publicly disclosed data on spam and fake accounts, claiming they make up more than 20% of all users. On Tuesday, Mr Musk said he would only go ahead with his offer if Twitter can prove the number is less than the 5% the social media company has reported.

In its latest statement, Twitter said it’s “committed to completing the transaction on the agreed price and terms as promptly as practicable”. The board disclosed all relevant details related to Mr Musk’s offer, including how he intends to finance the purchase, the behind the scenes events between the billionaire entrepreneur and Twitter’s executive leadership that led to the offer, and what will happen to shares held by Twitter’s employees and executives if the offer is finalised.

The board cited a host of factors that influenced its decision to recommend that shareholders approve the deal, including an improvement in Twitter’s competitive positioning and prospects if it were to become an independent company, and the board’s belief that the deal has a high level of closing certainty.

Several risks

The board also listed several risks associated with Twitter’s business model if it were to remain a public company such as the challenge of “making investments, operational changes and improvements, including meaningful cost reductions, to achieve long-term growth and profitability” and “the historical challenges to Twitter’s ability to grow its advertising revenue”.

The filing went on to say that none of the possible strategic alternatives to the merger was likely to present better opportunities for Twitter to create greater value for its stockholders. The US Securities and Exchange Commission will review the deal, although the regulatory agency generally lacks the power to stop corporate mergers, and shareholders will vote on approval at Twitter’s agm on May 25. 

• Bloomberg