Twitter said Elon Musk’s $44 billion takeover proposal is “fair to, advisable and in the best interests of Twitter and its stockholders.”
Updated at 6:28 am EST
Twitter (TWTR) – Get Twitter Inc. Report said Tuesday that its board of directors is recommending that shareholders vote in favor a merger agreement that would see Tesla (TSLA) – Get Tesla Inc. Report CEO Elon Musk purchasing the micro-blogging website for around $44 billion.
The recommendation comes ahead of a likely early August vote on the deal, which would see Musk, by some measures the world’s richest man, purchase Twitter at $54.20 per share and then take it private.
“Twitter’s Board of Directors, after considering the factors more fully described in the enclosed proxy statement, unanimously determined that the merger agreement is advisable and the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Twitter and its stockholders,” the company said in a Securities and Exchange Commission filing. “And adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.”
Twitter shares were marked 3.8% higher in pre-market trading to indicate an opening bell price of $39.21 each.
The board’s recommendation, however, comes just hours after Musk again cast doubt over the chances of completing the $44 billion deal.
Musk, speaking at the Bloomberg-sponsored Qatar Economic Forum on Monday, Musk said he was “still awaiting resolution” on the issue of so-called ‘fake accounts’ on the platform, which Twitter says represent less than 5% of total users. Musk, who has demanded access to Twitter’s methodology in calculating that number, has said the deal remains ‘on hold’ until it can be resolved.
Musk also hinted at whether “the debt portion of the (funding) round come together”, suggesting bankers may be having second-thoughts on lending into a $44 billion purchase price when stock markets are valuing Twitter at less than $29 billion.
Musk, who waived his right to due diligence on the deal when it was unveiled earlier this spring, said earlier this month that Twitter is “transparently refusing to comply with its obligations under the merger agreement”, adding that he is not persuaded by its “lax testing methodologies” on the calculations of fake accounts.
He accused Twitter of being in a “clear material breach” for failing to provide the data and threatened his “right to terminate the merger agreement” as a result.
The website reportedly agreed to share a “firehose’ of data with Musk in response, including details of the more than 500 million Tweets posted each day, in order to placate his concerns over the level of fake accounts.