A legal dispute between Elon Musk and the social media business is anticipated to take center stage after the world’s richest man pulled away from the $44 billion transactions, which caused Twitter Inc. shares to drop almost 6% in premarket trade on Monday.
Tesla Inc. CEO Elon Musk announced on Friday that he was canceling the acquisition of Twitter due to the company’s many violations of the merger agreement. View More
According to those familiar with the situation, Twitter intends to sue Musk as early as this week to force him to finish the transaction.
Musk poked fun at Twitter’s position on Monday, writing that the legal dispute will force the firm to reveal information about bots and spam accounts in court.
After the news on Friday, Musk responded in a series of tweets.
Twitter shares suffered a combined blow from a decline in the overall equity market and investor uncertainty over the deal, ending the day Friday at $36.81, a 32 percent discount to Musk’s $54.20 offer.
Brent Thill, an analyst with Jefferies, wrote in a note, “We believe that Elon Musk’s plans to terminate the merger are more predicated on the current market sell-off than…’failure’ Twitter’s to comply with his wishes.
We wouldn’t be shocked if the stock found a floor at $23.5 in the absence of a deal.
The agreement stipulates that Musk must pay Twitter a $1 billion breakup fee if he is unable to close the transaction due to events like the failure of the acquisition finance or opposition from authorities. However, if Musk decides to end the agreement on his own, the break-up fee would not be charged.