Update: Shareholders voted to accept the deal later on September 13, 2022. Twitter shares stayed fairly flat throughout the day.
Shareholders of Twitter Inc. (TWTR) are poised to vote in favor of accepting the $44 billion bid by Elon Musk to acquire the social media company. Complicating the matter, Musk has tried to rescind his bid, alleging that Twitter misrepresented the number of spam accounts on its platform. Twitter has sued Musk to force him to honor his bid. Twitter's special meeting of stockholders will convene at 1:00 p.m. Eastern time on Sept. 13, 2022.
Meanwhile, also on Sept. 13, 2022, whistleblower Peiter "Mudge" Zatko, the former head of security at Twitter, will testify before the U.S. Senate Committee on the Judiciary about various irregularities that he claims to have found at Twitter during his period of employment there. Most notably, Zatko alleges that Twitter has a very lax attitude toward the protection of users' data. That hearing starts at 10:00 a.m. Eastern time.
- Twitter (TWTR) shareholders approved a $44 billion acquisition bid by Elon Musk.
- Meanwhile, Twitter whistleblower Peiter "Mudge" Zatko, its former head of security, testified before the U.S. Senate about irregularities at the company.
- Both the shareholder vote and the testimony took place on Sept. 13, 2022.
- Zatko's allegations may bolster Musk's case for dropping his bid without significant penalties, which may send Twitter's stock tumbling.
Implications From Twitter Shareholder Vote
Musk had agreed in April 2022 to pay $54.20 per share for Twitter. This represents a significant premium (30.9%) over its closing price of $41.41 on Sept. 12, 2022. If the deal goes through, this would produce a significant windfall for existing shareholders. On the other hand, if Musk succeeds in backing out of his bid without paying a large penalty, analysts expect that Twitter's share price will fall significantly.
Potential Fallout of Whistleblower Testimony
The testimony of whistleblower Zatko may help to bolster Musk's case for exiting his proposed deal to acquire Twitter. To date, legal experts have tended to believe that Twitter would prevail in a legal fight to force Musk to honor his bid. However, even absent Zatko's allegations, there are also questions about whether a judge would force a reluctant Musk to honor such a large deal. Furthermore, the so-called specific performance remedy that Twitter is seeking has not been tested previously on such a large scale.