Twitter shares have dropped nearly six percent in premarket trading after the social media company announced plans to sue Elon Musk for walking away from his buyout deal.
Shares of Twitter Inc have fallen about 6 percent in premarket trading 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.
Twitter is planning to sue Musk as early as this week and force him to complete the acquisition, people familiar with the matter said 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.
The series of tweets was Musk's first public response since the Friday announcement.
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.
— Elon Musk (@elonmusk) July 11, 2022
Double whammy of a slump
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.
Source: Reuters
Social media is bold.
Social media is young.
Social media raises questions.
Social media is not satisfied with an answer.
Social media looks at the big picture.
Social media is interested in every detail.
social media is curious.
Social media is free.
Social media is irreplaceable.
But never irrelevant.
Social media is you.
(With input from news agency language)
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