Twitter Fires Back in Letter to Elon Musk, Claims No Deal Obligations Breached

Twitter said in a letter to Elon Musk that the merger agreement remained in place, and it would take steps to close the deal.

Twitter Fires Back in Letter to Elon Musk, Claims No Deal Obligations Breached

Twitter has planned to sue Musk to force him to complete the deal

Highlights
  • Twitter is planning to file a lawsuit early this week in Delaware
  • Tesla's shares closed down almost 7 percent
  • Twitter would take steps to close the deal
Advertisement

Twitter fired back at Elon Musk on Monday, accusing the world's richest person of "knowingly" breaching an agreement to buy the social media firm, days after the Tesla chief sought to back out of the $44 billion (roughly Rs. 3,37,465 crore) deal.

In a letter sent to Musk, dated Sunday and filed with regulators on Monday, Twitter said it had not breached its obligations under the merger agreement as indicated by Musk on Friday for looking to end the deal.

"Twitter demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement, including their obligations to use their respective reasonable best efforts to consummate and make effective the transactions contemplated by the Agreement," the letter said.

The company has planned to sue Musk to force him to complete the deal, a threat he laughed off on Monday, when he sent a series of tweets joking about Twitter and its threat to enforce the agreement in court. Twitter is planning to file a lawsuit early this week in Delaware, people familiar with the matter told Reuters.

Twitter said in the letter that the merger agreement remained in place, adding it would take steps to close the deal.

Twitter's shares ended down 11.3 percent at $32.65 (roughly Rs. 2,500), a 40 percent discount to Musk's $54.20 (roughly Rs. 4,300) bid and the biggest daily percentage drop in more than 14 months. They rebounded less than 1 percent in extended trading.

Tesla's shares closed down almost 7 percent.

Traders short selling Twitter's tumbling stock made $148 million (roughly Rs. 1,178 crore) in mark-to-market profits on Monday, while short bets against Tesla resulted in $1.3 billion (roughly Rs. 10,352 crore) in mark-to-market profits, according to S3 Partners.

"Twitter's board must contemplate the potential harm to its employee and shareholder base of any additional internal data exposed in litigation," Benchmark analyst Mark Zgutowicz said.

Francis Pileggi, a corporate litigator with Lewis Brisbois in Delaware, said Musk could put the social media giant's so-called "bots" front and center in future litigation if he defends against Twitter's lawsuit by claiming the company misrepresented the number of fake accounts.

"I'd be surprised if he's prohibited from getting that information," Pileggi said.

Pileggi said if the number of fake accounts is many times higher than the 5 percent estimated by Twitter, it could lead to negotiations for a reduced price for the social media platform.

Legal experts say the 16-year-old social media company has a strong legal case against Musk, but could opt for a renegotiation or settlement instead of a long court fight.

"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 wrote in a note.

"In the absence of a deal, we would not be surprised to see the stock find a floor at $23.5 (roughly Rs. 1,800)."

© Thomson Reuters 2022


Noise co-founder Amit Khatri joins Orbital, the Gadgets 360 podcast, for a special episode. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: Elon Musk, Twitter, Tesla
Webb Telescope’s First Image of Galaxy Cluster SMACS 0723 Unveiled, Astronomers Call It Remarkable
Loss-Ridden BTC, ETH Usher Altcoins Into Reds Again, Stablecoins Hold Onto Greens
Share on Facebook Gadgets360 Twitter Share Tweet Snapchat Share Reddit Comment google-newsGoogle News
 
 

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2024. All rights reserved.
Trending Products »
Latest Tech News »