Bonds backing Twitter Inc. were moving lower in a flat to slightly firmer secondary market today, as Elon Musk cast yet more doubt on the future of his proposed buyout of the company and Twitter management held the line.
Musk on Monday filed an amended Schedule 13D with the Securities and Exchange Commission that included a letter from his lawyers suggesting Twitter management is “actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” and asserting that Musk is within his rights “not to consummate the transaction and his right to terminate the merger agreement.”
The $44 billion Twitter buyout has been on hold since May 13 when Musk suggested Twitter executives might have misstated the number of fake and spam accounts on the platform. Musk initiated his own investigation and noted via his lawyers in Monday’s letter that Twitter"s behavior raises the “suspicion” that the company is withholding the requested data as it fears that Musk’s own analysis of that data will “uncover something.”
Twitter’s response came in the early afternoon. “Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders,” the company stated.
The Twitter 5% senior unsecured notes due 2030 today dropped a full point in a quiet morning session, to around the 98 mark, having bounced off a May 18 low of 96.625 to recent peak trades around 100.5 as Twitter executives rebuffed the mid-May accusation and told employees they would not renegotiate deal terms.
Musk’s fake-account assertions are among the last hurdles to the completion of the deal, with the buyout waiting period for the bid under the HSR Act having expired on June 2. When first raised, Wedbush analyst Dan Ives deemed them an excuse for the billionaire to back out of the deal or negotiate a lower sale price. In a Monday morning tweet, Wedbush’s Ives said Musk is looking to walk away from the deal.
“Speaks to our thesis over past few weeks that spam/bot issue was going to be the ‘material breach’ cited by Musk to try to get out of TWTR deal. $1 billion breakup fee; Twitter Board will fight this clearly. Help remove a major overhang on Tesla; Twitter stock be under pressure,” Ives tweeted.
Tesla shares advanced as much as 3% this morning. Meanwhile, Twitter shares were down 5.5%, at $38.13—a steep discount to Musk’s original offer of $54.20 per share.
Featured image by Shutterstock
Learn about our editorial standards.