Twitter shareholders, vote!

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Twitter Inc.’s shareholders are voting today on whether to sell the company to Elon Musk at $54.20 per share. Twitter closed yesterday at $41.41 per share. There is not much suspense here. If you have stock that is worth $41.41 per share, and someone wants to buy it from you at $54.20, you should let him. Twitter is easily going to get its votes. The Wall Street Journal reports:

Early votes show investors approving the deal by a wide margin, the people said, though there is always a chance that the results could change as shareholders can alter their votes through a meeting scheduled for Tuesday at 1 p.m. Eastern time.

I do not actually think there’s much chance that the results could change. If you are a Twitter shareholder, what could possibly happen between now and 1 p.m. that would make you not want to cash out at $54.20?

There are a few complications. One is that news is definitely happening about Twitter today. Peiter “Mudge” Zatko, Twitter’s former head of security who has turned whistle-blower, testified in Congress today about how bad Twitter’s security is. But nothing that he says is going to make Twitter shareholders less likely to vote for the deal. The worse Twitter is, the more excited you should be about getting $54.20 for your Twitter shares. If Zatko showed up at this hearing and said “actually Twitter’s security is great and they’ve discovered cold fusion” then I guess you should vote to keep your shares; in a world where Twitter is worth much more than $54.20 on its own, the vote will probably fail. But he didn’t say that.

Another complication is that, of course, voting to sell to Musk at $54.20 doesn’t mean it’ll actually happen. Musk has terminated the deal (three times!) because he claims that Twitter has breached some conditions and so he doesn’t have to actually buy it; a Delaware court will decide if he’s right about any of those things. I tend to think that he’s wrong and will have to close, but I don’t have especially huge confidence in that belief, and the market-implied odds aren’t that great, which is why the stock is trading at $41.41. Still, if you are a Twitter shareholder, you have to vote yes on the deal, because if everyone votes no then the deal is definitely dead; if shareholders don’t approve the deal, that gives Musk a fourth and unassailable reason for terminating it. The shareholders voting to close the deal is a necessary but not sufficient condition to the deal closing. Which is why they’ll vote yes.

A third complication is that Twitter’s biggest shareholder is, uh, Elon Musk, and he’s trying to get out of the deal. Could he vote his 9.5% stake in Twitter against the deal, thus preventing it from closing? Well. The merger agreement (section 6.2(d)) says that he has to vote in favor of the deal, but he claims to have terminated the agreement (three times!) so perhaps he no longer feels bound by that, and it is a bit awkward for him to vote yes on a deal that he wants to get out of. What will he do? Eh, it doesn’t really matter; I’m pretty sure that Twitter is going to get a huge majority and won’t actually need Musk’s votes.