Before jumping in Twitter stuff, let’s look at another acquisition deal.
Thoma Bravo signed a merger agreement to buy Anaplan for $66 per share some time ago, but then the market crashed and Thoma Bravo regretted its choices. So it called Anaplan up and said, in effect, you have to cut the price or we will try to find an excuse to get out of the deal. Anaplan grudgingly agreed to cut the price to $63.75. In exchange, it got:
- Considerably more certainty that the deal would close, as Thoma Bravo waived various closing conditions and agreed to a much higher breakup fee; and
- The satisfaction of writing a merger proxy statement explaining in great and peevish detail how Thoma Bravo dishonorably demanded a discount on the deal it had agreed to.
Would you pay $400 million of shareholder money for the right to vent publicly about your merger partner retrading the deal? I see the appeal. Anyway the deal closed today, at $63.75, so it all worked out.
Now, the Twitter stuff.
Yesterday Twitter Inc. filed the revised proxy statement for its deal with Elon Musk. Elon Musk signed a merger agreement to buy Twitter for $54.20 per share, but then the market crashed and Musk regretted his choices. So he started tweeting excuses to get out of the deal. Those excuses are not very good (Musk claims that the fake Twitter accounts far exceeding 5%), and as far as I know the deal is still on and Twitter has not agreed to any sort of price cut. On the other hand Musk keeps talking about those excuses, and Twitter’s stock closed yesterday at $38.91, which is very much not $54.20, so the market certainly thinks that he’ll either get out of the deal or get a lower price.
In a better world, Twitter’s revised proxy would be like Anaplan’s, laying out a detailed timeline of Twitter’s negotiations with Musk since signing the merger agreement, and expressing Twitter’s annoyance with Musk’s excuses. But I suppose that is not a good idea for Twitter at this point. Here is more or less all they say about it, from the Questions and Answers section of the revised proxy:
Q: What is the current status of the transaction?
A: Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable. Twitter and its representatives, and Mr. Musk and his representatives, are meeting regularly to discuss the transaction and the remaining actions necessary to close the transaction. In connection with these discussions, in accordance with the merger agreement, Twitter is providing Mr. Musk and his representatives with information concerning Twitter. Twitter stands behind the accuracy of its public disclosures, including with respect to its estimates of false and spam accounts, and is providing information to Mr. Musk related to such disclosures.
Well, this doesn’t really explain if the deal is off or not, or if there will be a price cut. But it seems this is the best explanation we can get for now.