New SEC Filing Reveals Details of Musk’s Twitter Negotiations

(L) Elon Musk speaks at the E3 gaming convention in Los Angeles on June 13, 2019. Jack Dorsey speaks at the Consensus 2018 blockchain technology conference in New York City on May 16, 2018. (Mike Blake, Mike Segar/Reuters)

A new filing released by the Securities and Exchange Commission on May 17 revealed further details of Elon Musk’s $44 billion deal to take Twitter private, giving the public a more complete picture of the negotiations leading up to the acquisition.

The filing, submitted by Twitter Inc., describes a series of close negotiations between Musk and Twitter co-founder and former CEO Jack Dorsey, in which Dorsey appeared to encourage Musk in his takeover of the company.

Notably, the filing details how Dorsey personally counseled Musk that the company would be better positioned under private ownership, ahead of Musk’s decision to buy the company outright. Musk subsequently offered Dorsey the opportunity to remain on the board despite his existing plans to depart, but Dorsey declined the offer.

Additionally, the document attests to a series of private meetings between Musk, current CEO Parag Agrawal, board chairman Bret Taylor, and directors Egon Durban and Martha Lane Fox, in which Musk openly weighed several options for his engagement with the company.

In addition to considering joining the Twitter board of directors as a minority shareholder and acquiring the company outright, Musk also expressed openness to starting his own competing platform—perhaps resolving some unanswered questions about the entrepreneur’s “Plan B” during the Twitter acquisition process, which he alluded to but refused to elaborate on during a TED event in Vancouver, British Columbia, in April.

But the deal Musk struck to acquire Twitter at a price of $54.20 per share has been called into question by the Tesla CEO’s recent tweets, in which he suggests he was misled by Twitter’s claims that only 5 percent of active users were “bots,” or fake accounts. On May 13, Musk wrote on Twitter that the deal was “temporarily on hold,” but appeared to contradict this remark several hours later, saying that he was still “committed to acquisition.”

Musk continued sniping at Twitter leadership on May 16, after CEO Parag Agrawal published a lengthy thread defending the company’s management of the bot problem. Musk replied to one of Agrawal’s tweets with an emoji depicting fecal matter, signifying his disapproval of the content of the thread.

The looming threat of renegotiation has sent Twitter’s stock price into decline since the announcement of the deal, as many investors are fearful that the $54.20 per share payoff may not come to fruition. However, despite Musk’s misgivings about Twitter bots—and the potential to use them as leverage for renegotiation—there are significant barriers to reneging at this stage in the process, including a reported $1 billion “reverse termination fee” on Musk for backing out of the process.

Twitter’s board of directors has issued a statement reiterating its commitment to the terms of the deal, stating that board members “intend to close the transaction and enforce the merger agreement,” per the original terms.