Shares of Twitter Inc fell about 6 percent in premarket trading on Monday as a legal tussle between Elon Musk and the social media company is expected to take center stage after the world’s richest person walked away from the $44 billion deal.
Musk, the chief executive officer of Tesla Inc, said on Friday he was terminating his deal to buy Twitter because the company had breached multiple provisions of the merger agreement.
Twitter is planning to sue Musk as early as this week and force him to complete the acquisition, people familiar with the matter told Reuters.
On Monday, Musk took a jab at Twitter’s stance, tweeting that the legal battle would lead to the company disclosing information on bots and spam accounts in court. (https://bit.ly/3uCUPvd)
The series of tweets was Musk’s first public response since the Friday announcement.
Twitter shares ended at $36.81 on Friday and were at a 32 percent discount to Musk’s $54.20 bid, as they have been hit by a double whammy of a slump in the broader equity market and investor skepticism over the deal.
“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,” Jefferies analyst Brent Thill said in a note.
“In the absence of a deal, we would not be surprised to see the stock find a floor at $23.5.”
The contract calls for Musk to pay Twitter a $1 billion break-up fee if he cannot complete the deal for reasons such as the acquisition financing falling through or regulators blocking the deal. The break-up fee would not be applicable, however, if Musk terminates the deal on his own.
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