After Elon Musk, the CEO of Tesla Inc., attempted to back out of the $44 billion deal, Twitter Inc. retaliated on Monday, accusing the richest man in the world of “knowingly” breaking the terms of the agreement to purchase the social media company.
Twitter claimed in a letter to Mr. Musk dated Sunday and submitted to regulators on Monday that it had not violated the merger agreement as Mr. Musk had claimed on Friday in order to end the deal. (
Twitter demanded that Mr. Musk and the other Musk Parties adhere to their obligations under the Agreement, including using their respective “reasonable best efforts” to complete and make effective the transactions contemplated by the Agreement, according to the letter.
When the company threatened to take legal action against Mr. Musk to force him to complete the deal, he laughed it off on Monday when he sent a series of tweets making fun of Twitter and the threat. According to people familiar with the situation who spoke to Reuters, Twitter plans to file a lawsuit in Delaware early this week. the complete story
In the letter, Twitter stated that the merger agreement was still in effect and that it would move forward with the transaction. the complete story
The shares of Twitter closed down 11.3 percent at $32.65, which was the biggest daily percentage drop in more than 14 months and a 40 percent discount to Mr. Musk’s $54.20 offer. In extended trading, they recovered by less than 1%.
Nearly 7% of Tesla’s stock was down at the close.
Trading short term On Monday, short bets against Twitter’s falling stock generated mark-to-market profits of $148 million, while bets against Tesla generated mark-to-market profits of $1.3 billion, according to S3 Partners.
According to Benchmark analyst Mark Zgutowicz, “Twitter’s board must consider the potential harm to its employee and shareholder base of any additional internal data exposed in litigation.”
Francis Pileggi, a corporate litigator with Lewis Brisbois in Delaware, warned Mr. Musk that if he uses Twitter’s lawsuit as a platform to argue that the company overstated the number of fake accounts, it could put the social media giant’s alleged “bots” front and center in subsequent legal proceedings.
If he is not allowed to obtain that information, Mr. Pileggi said, “I’d be surprised.”
Mr. Pileggi stated that negotiations for a lower price for the social media platform could begin if the number of fake accounts is significantly higher than the 5 percent estimated by Twitter.
According to legal experts, the 16-year-old social media company has a solid legal case against Musk, but instead of a protracted legal battle, it might choose to renegotiate or reach a settlement.
Brent Thill, an analyst with Jefferies, stated in a note, “We believe that Elon Musk’s intentions to terminate the merger are more based on the recent market sell-off than… Twitter’s ‘failure’ to comply with his requests.
We wouldn’t be shocked if the stock found a floor at $23.5 in the absence of a deal. by Reuters
