Fifteen Bucks

A month after billionaire Elon Musk declared his pending bid to buy Twitter “on hold,” the social media company has taken a major step that may have sealed the deal.

The board of directors of Twitter on Tuesday unanimously recommended that shareholders approve Elon Musk’s proposed deal to acquire the company, according to an SEC filing cited by the New York Post.

The Twitter board “unanimously recommends that you vote [for] the adoption of the merger agreement,” per the report.

“Twitter’s Board of Directors, after considering the factors more fully described in the enclosed proxy statement, unanimously … (1) determined that the merger agreement is advisable and the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Twitter and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement,” the filing notes.

The letter also stated that the board has “determined that the merger agreement is advisable and the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Twitter and its stockholders.”

If the deal went through under its present terms, each Twitter stockholder would get a cool fifteen bucks per share.

Which sounds reasonable until you consider that 20% or more of Twitter’s users might be bots.

After Musk had threatened to pull out of the deal over the concern about fake accounts, Twitter made its “firehose” of data available to the prospective buyer of the company.

The Washington Post described the “firehose” as “not only a real-time record of tweets but the devices they tweet from, as well as information about the accounts that tweet.”

“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,” Twitter said in a press statement earlier this month. “We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”

The only other impediments to Musk’s purchase are Twitter shareholder approval, which looks to be a slam dunk in light of the board’s vote, and the debt portion. Word on the street is that Musk has the financing lined up, so the matter of just how many Twitter accounts are fake is the only sticking point.

What does that mean in the final analysis? Everybody knows Twitter keeps an army of bots to manipulate trending topics and prop up blue check accounts. Musk’s 20% estimate is conservative, to say the least.

What if Twitter’s “firehose of data” reveals fake accounts in excess – perhaps far in excess – of the company’s 5% claims?

Musk walking away from the deal is the least likely outcome. Even if the site turns out to be a handful of real users talking to millions of bots, Twitter held up its end by handing over the data. That means Musk would be on the hook for a billion-dollar penalty if he cancelled the deal.

He’s already overpaying for Twitter, so he might as well bite the bullet and follow through.

The best explanation I’ve heard is that Musk brought up the bot issue as a haggling tactic to negotiate a better price. So don’t be surprised if he hands down a statement within a few weeks saying, “We looked at the data and found that 15% of accounts are fake. There’s no way I’m paying $44B for this company.”

In that event, Twitter will take a hard line and refuse to lower the price, arguing that the agreement gives no wiggle room for negotiation.

What happens then is Musk calls the deal off, Twitter’s stock collapses, and Musk comes back and buys the company at a deep discount.

That looks like the gambit he’s going for, and in all likelihood it will work.

Like any entrepreneur worth his salt, Musk knows that if someone gives you two unfavorable options, you make a third.

So this deal is going through; it will just take a little more time than many cultural dissidents hoped.

While you’re waiting to get your Twitter account back, enjoy my award-winning horror adventure series about spacefarers taking down a corrupt monopoly.

Read it now: