Board approves Elon Musk’s Twitter offer, but billionaire points to backlogs

Twitter’s board unanimously recommended that shareholders approve the company’s proposed $44 billion sale to billionaire and Tesla CEO Elon Musk, according to a regulatory filing released on Tuesday.

After controversy and back-and-forth, Musk reiterated his desire to move forward with the acquisition of the social network last week during a virtual meeting with Twitter employees.

At the Qatar Economic Forum on Tuesday, Musk listed shareholder approval of the deal as one of several “unresolved issues” in relation to the Twitter purchase.

As ABC News reported, in a filing with the US Securities and Exchange Commission, the company’s board said it “unanimously recommends that you [acionista] vote (in favour) for the adoption of the merger agreement”.

The idea is for the company’s investors to pocket a profit of US$ 15.22 per share.

It is worth noting that the shares of Twitter Inc. were relatively flat on Tuesday, but far below the $54.20 a share Musk offered to pay.

In fact, the last time the stock hit this price was on April 5th. On the date, Twitter offered Musk a seat on the board before he offered to buy the entire company.

Anyway, there are still issues to be resolved. According to an interview with Bloomberg by the billionaire on Tuesday, there are three main hurdles to overcome before he can complete the purchase.

Fake accounts on twitter

First, Musk has returned to speak out about his concerns about fake accounts and bots on the social network.

The billionaire wants to know precisely how many of his users are genuine. On some occasions, he threatened to back out of the acquisition if the data was not disclosed.

In mid-May, he actually suspended the deal on the grounds that additional details supporting the calculation of spam and fake Twitter accounts were pending.

Twitter had informed Musk that the number of fake or spam accounts represented less than 5% of its users.

But for Musk, that number is inaccurate. During the interview, he stated that “it’s probably not most people’s experience using Twitter.”

“We are still awaiting a resolution on this matter, and this is a very significant matter,” he said.

Debt financing

The second obstacle cited by Musk that would be hindering the acquisition is debt financing.

In May, the billionaire pledged to pay $33.5 billion in cash for the company. Additionally he has received $7.1 billion in equity funding commitments from investors including Binance, Sequoia, and Fidelity.

Binance, for example, has committed $500,000,000 to support Musk. For the company’s CEO, Changpeng Zhao, the CZ, this is a “small” contribution to the cause.

Musk says the rest of the funding will come in the form of bank loans. However, it still seems uncertain how this will occur in practice.

Board approval

Finally, the third hurdle, according to Musk, is the ordeal of Twitter shareholders. They are expected to vote on the deal in late July or early August. But it’s also unclear whether Musk will have enough support for the purchase.

“Will the debt portion of the round join? And then shareholders will vote for it?” Musk asked.

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