August 12, 2022

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Twitter warned that it may lose key employees and have difficulty hiring during the period before it closes its $44 billion sale to Elon Musk. Twitter also warned that it could have trouble keeping advertisers on board.

“During the period prior to the closing of the merger, our business is exposed to certain inherent risks and certain restrictions on our business under the terms of the Merger Agreement that could harm our business relationships, financial condition, operating results, cash flows, and business,” Twitter said in a Securities and Exchange Commission filing on Monday.

Twitter’s stated list of risks includes “whether advertisers continue their spending on our platform” and “our inability to attract and retain key personnel and recruit prospective employees, and the possibility that our current employees could be distracted, and their productivity decline as a result, due to uncertainty regarding the merger.”

“[W]e may experience a departure of employees, prior to the closing of the merger,” Twitter’s filing also said. While this type of filing lists many risks of varying likelihood, Twitter’s concerns about keeping and hiring employees come amid reports of employee discontent about Musk buying the company. Twitter CEO “Parag Agrawal sought to quell employee anger on Friday during a company-wide meeting where employees demanded answers to how managers planned to handle an anticipated mass exodus prompted by Elon Musk,” Reuters reported.

Twitter’s SEC filing also warned that possible litigation could “prevent consummation of the merger” and that “[i]f the merger is not consummated for any reason, litigation could be filed in connection with the failure to consummate the merger.”

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Musk wants “most of America” on Twitter

Meanwhile, Musk said on Monday that his goal “with Twitter is to have a service that is as broadly inclusive as possible where ideally most of America is on it and talking.”

Twitter says it has an average of 39.6 million daily active users in the US and 189.4 million globally. “Right now it’s sort of niche. I want a much bigger percentage of the country to be on it, engaging in dialogue,” Musk said.

Musk also said, “We have to get rid of the bots and trolls and the scams and everything because that’s obviously diminishing the user experience and we don’t want people getting tricked out of their money.”

Musk on employee departures: “That’s fine”

Musk made his comments to reporters at the Met Gala in New York. A Reuters article recounted how Musk addressed a potential mass departure of employees:

The billionaire also said he would make Twitter transparent about how tweets are promoted or demoted and wanted its software to be publicly available for critique.

Asked about a potential exodus of employees, Musk said: “It’s a free country.”

“Certainly if anyone doesn’t feel comfortable with that, they will on their own accord go somewhere else. That’s fine,” he said.

Musk has said he is buying Twitter to protect free speech, which he defines as “that which matches the law.” The purchase is pending shareholder approval and is expected to close later this year.

Musk sold $8.5 billion in Tesla stock after agreeing on deal terms with Twitter’s board, but he is also “in talks with large investment firms and high net-worth individuals about taking on more financing for his $44 billion acquisition of Twitter and tying up less of his wealth in the deal,” Reuters reported.

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