Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.
A majority of Twitter shareholders voted in favor of a $44 billion deal to sell the social media company to Tesla and SpaceX CEO Elon Musk, according to a recent report from Reuters.
Multiple sources told the outlet that the deadline for shareholders to submit votes on the deal is on Tuesday, although a sufficient number of investors cast their ballots by Monday evening for the outcome to be determined.
Musk, however, is attempting to nix the merger. The world's richest man claims that the platform's actual number of fake accounts - otherwise known as bots - could be as high as 33% rather than the company's reported 5%. He argues a lower number of monetizable daily active users potentially justifies a lower valuation. Twitter is therefore battling the multibillionaire in court over his desire to cancel the deal.
With a 9.6% stake in the company, Musk remains Twitter's largest shareholder, according to a report from Axios. Beyond large asset management companies such as Vanguard and BlackRock, billionaire Saudi Arabian investor Alwaleed bin Talal and former Twitter CEO Jack Dorsey are among the largest shareholders, with 3.9% and 2.4% stakes, respectively.
Court proceedings last week revealed that Musk had texted Michael Grimes, a managing director at investment bank Morgan Stanley, on May 8 to express concerns about the Russian invasion of Ukraine and its effects on the global economy. "Let's slow down just a few days. Putin speech tomorrow is extremely important,"
Musk wrote. "It won't make sense to buy Twitter if we're heading into World War III."
The text could potentially place Musk in breach of contract, which mandates that the buyer use his best efforts to complete an acquisition deal, and could refute the claim that an inaccurate count of fake users is behind his hesitancy to purchase the company.
As Musk mentioned, several technology companies have managed macroeconomic risk by pausing hiring and reducing office space. Twitter reported losses of $0.08 per share in its second-quarter earnings, falling below the $0.14 gain per share expected by analysts. The rough quarter was attributable to "advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk,"
the company said in a press release.
Musk's initial offer of $44 billion would give Twitter a valuation of $54.20 per share. The company was trading at roughly $40.50 per share as of Tuesday morning.
In a victory for Musk's legal team, Delaware Chancery Court Chancellor Kathaleen McCormick granted attorneys representing Musk permission last week to use the testimony of former Twitter executive Peiter "Mudge"
Zatko - who claimed in a recent whistleblower report that his colleagues did not have the resources or motivation necessary to determine the number of bots on the platform.
Zatko, slated to testify before the Senate Judiciary Committee on Tuesday, claimed that Twitter leadership misled board members and government officials about vulnerabilities that left the company open to hacking, foreign manipulation, and spying. He asserted that one or more current employees work for a foreign intelligence agency.
"All engineers had access. There was no logging of who went into the environment or what they did,"
Zatko asserted. "Nobody knew where data lived or whether it was critical, and all engineers had some form of critical access to the production environment."