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Twitter freezes employee stock ahead of deadline for Elon Musk deal

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The Twitter logo is seen on a cellphone on Friday, Oct. 14, 2022, in Boston.

The Twitter logo is seen on a cell phone, Friday, Oct. 14, 2022, in Boston. (AP Photo/Michael Dwyer)

Michael Dwyer, Associated Press

In an optimistic signal that the long-running saga might actually be coming to a close, on Monday Twitter reportedly froze its employees’ access to equity stock accounts ahead of an upcoming, court-stipulated deadline for closure of Elon Musk’s on-again off-again $44 billion bid to take over the social media giant.

Why did Twitter freeze employee stock accounts?

Bloomberg reports that Twitter updated its employee FAQ page this week to alert staff that they won’t be able to access or trade shares from the Equity Award Center. The page said the change was done “in anticipation of the closing of the pending acquisition of Twitter by an entity controlled by Elon Musk,” according to two people familiar with the change.  

“This freeze allows Schwab to perform final reconciliation of employee accounts prior to close of the acquisition,” the update reads, per Bloomberg. Restricted stock units for a number of workers are due to vest early next month, the people said. A number of staff have been seeking other jobs and plan to resign once the stock vests, they said.

A Twitter spokesperson declined Bloomberg’s request for comment. 

So, what’s the deal with the deal?

Earlier this month, Musk revived his $44 billion offer to buy Twitter, the latest chapter in an epic tale that’s been alternately revving up and spinning out from the start of the new year.

The about-face comes after months of wrangling that began with Musk buying up stock in the company (January), then offering to buy the company (April), then reneging on the offer (July 8), arguing that Twitter hadn’t met its disclosure duties when it comes to identifying the number of fake or “bot” accounts on the platform.

Twitter called shenanigans on that argument and filed a lawsuit against Musk (July 12), looking to compel him to follow through with the deal or pay some very hefty penalties.

Musk and Twitter were just a couple of weeks away from the launch of their legal battle in a Delaware specialty court when it was disclosed in an Oct. 4 U.S. Securities and Exchange Commission filing that Musk’s legal team had proposed a do-over to Twitter’s lawyers. Not surprisingly, Twitter accepted.

The exchange puts the deal back on its original terms wherein Musk will cash out Twitter stockholders at $54.20 per share, the number behind the $44 billion buyout figure.

While Musk lawyers have asked that all legal proceedings come to a halt, including his previously scheduled deposition that was set to begin on Thursday, Twitter has yet to call off the lawsuit.

Tick-tock said the clock

While Twitter’s announced freeze on employee stock account access appears to be a positive sign that things are progressing toward a final agreement, the Delaware court has given Musk until Oct. 28 to close the deal. If that doesn’t happen, the lawsuit, which was previously scheduled to begin on Oct. 17, is back on with a likely court date in November.

Even with all signs pointing to a resolution, industry experts warn Twitter still has plenty of challenges ahead.

“The deal will solve some of the short-term uncertainty at the company, but Twitter is essentially in the same place it was in April,” Jasmine Enberg, an analyst with Insider Intelligence, told The Associated Press.

“There is still plenty of uncertainty around what Musk intends to do with Twitter, as well as the future of a company with a leader who has wavered in his commitment to buying it. And if we’ve learned anything from this saga, it’s that Musk is unpredictable and that it isn’t over yet.”