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Did Instagram Forget Its $525 Million Verbal Agreement With Twitter?

Everyone was wondering a while back how Twitter could have missed out on snagging Instagram, particularly when Twitter co-founder Jack Dorsey was an Instagram investor.

Well, it turns out Twitter did attempt to buy Instagram and may not have been given an opportunity to provide a counteroffer – and that could put Instagram’s CEO, Kevin Systrom, in a bit of hot water.

The New York Times is reporting that when Facebook purchased Instagram, the photo giant’s CEO testified before the California Corporations Department that “his company had [not] received any offers besides Facebook’s at the time of the negotiations.”

Yet the accounts of several people close to Twitter and Facebook, and documents reviewed by The New York Times, contradict the statements he made under oath. Mr. Systrom and Mike Krieger, the other founder of Instagram, held several meetings as late as March with top Twitter executives, according to people on both sides of the talks, who requested anonymity because the talks were private and because they were concerned about legal repercussions. These people said the sides had verbally agreed weeks earlier on a price for Instagram of $525 million in cash and Twitter shares.

Systrom also allegedly told Twitter that they “had thought about the offer and had decided to ‘remain independent.’”

Three weeks later, blammo: Facebook buys Instagram.

The people familiar with the negotiations said Twitter executives were shocked that they had not been given an opportunity to present a counteroffer. They said Twitter was prepared to make higher offers.

And there’s all kinds of shady news about his Twitter interactions swirling about. The Times reports he “was careful about his interactions with Twitter from the start. He asked to meet in restaurants around San Francisco, rather than in either company’s office, according to people briefed on the talks. When he was handed the term sheet by a Twitter employee, a nonbinding document outlining the terms of a proposed acquisition, he read it and then handed it back, asking Twitter executives to hold onto it over the weekend as he weighed the details, those people said.” Wow.

We’ll keep you posted as the story develops.

(Reminder image from Shutterstock)

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