Twitter shareholders on Tuesday, as expected, overwhelmingly approved Elon Musk's $44 billion takeover bid for the company at $54.20 a share, another step in a complicated saga that could have big financial repercussions for either side. TWTR stock rose Tuesday.
The shareholder vote comes roughly a month ahead of a trial, scheduled for mid-October, over whether the deal should take place at all. Twitter and Musk, the chief executive of electric-car giant Tesla, are to face off in Delaware Chancery Court.
The trial seeks to resolve Musk's attempt to cancel his acquisition of the company, unless they reach a settlement first. Twitter now intends to enforce the agreement on terms previously agreed to with Musk.
TWTR stock climbed 0.8% to close at 41.74 during a rough session on the stock market today. The stock jumped 9.2% last week to 42.19.
Below The Asking Price
Twitter stock remains well below the $54.20 per-share price that Musk agreed to pay. But it's well above the recent TWTR stock low of 32.52 reached on July 12, when Musk officially announced plans to terminate the takeover.
Last week, Musk's attorneys moved to push back the trial by about a month. They also asked the judge for permission to update their counterclaims. That was due to the recent disclosure from former Twitter security head Peiter Zatko.
Zatko has alleged that Twitter misled Musk and the public about the prevalence of bots and spam accounts on its platform. It's an issue that Musk has made central to his argument to end the deal.
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A Delaware judge denied Musk's request to delay his trial. But the judge agreed to let Musk amend his countersuit to include some of Zatko's claims. The trial is set to run for five days starting Oct 17.
Another Reason To Walk Away From Deal
Musk has argued that a severance payment of $7.75 million to Zatko and his counsel is another reason he should be allowed to walk away from the deal.
On Monday, Twitter said that payments to Zatko did not breach any of its obligations.
"The Zatko development and timing is a huge potential win for Musk which could complicate the Twitter case," Wedbush analyst Dan Ives wrote in a note to clients.
"The shareholder approval expected tomorrow formally sets the stage for the 'Game of Thrones' battle between Musk and Twitter with the high possibility that some form of negotiation likely takes place ahead of the trial," Ives said.
TWTR Stock: Whistleblower A Major Variable
"Once both parties step into court it's a high risk/high reward scenario for both parties. A major X variable is now the Zatko whistleblower claims.
Among the various scenarios on the outcome, Ives said there is a "high likelihood" that Musk will be required to buy Twitter at $54.20 a share.
Another high likelihood scenario is that Musk needs to settle or pay significant damages to Twitter, which analysts speculate could range from $5 billion to $10 billion.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
