Elon Musk on Monday mocked Twitter Inc’s (TWTR.N) threat to sue him following his decision to abandon the $44 billion takeover deal, tweeting that the social media company would need to disclose more information on bots and spam accounts.
Twitter shares fell about 10% to $33.26 on Monday, a 38% discount to Musk’s $54.20 offer, as the company faces a double whammy of a drop in the broader equity market and investor skepticism about the deal. Tesla Inc shares were down 6% at $706.16.
The series of tweets on Monday marked Tesla CEO Elon Musk’s first response since announcing his intention to withdraw the offer on Friday due to Twitter’s violation of multiple merger agreement provisions.
“The board of Twitter must consider the potential harm to its employee and shareholder base of any additional internal data exposed in litigation,” said Benchmark analyst Mark Zgutowicz.
According to Francis Pileggi, a corporate litigator with Lewis Brisbois in Delaware, if Musk defends against Twitter’s lawsuit by claiming the company misrepresented the number of fake accounts, he could put bots front and center in the litigation.
“I’d be surprised if he can’t get that information,” Pileggi said.
Pileggi believes that if the number of fake accounts exceeds Twitter’s estimate of 5%, it could lead to price negotiations for the social media platform.
According to people familiar with the situation, Twitter plans to sue Musk as soon as this week to force him to complete the acquisition.
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According to legal experts, the 16-year-old social media company has a strong legal case against Musk, but it may choose a renegotiation or settlement over a lengthy court battle.
“We believe 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 wrote in a note.
“We would not be surprised if the stock found a floor at $23.5 in the absence of a deal.”