Twitter Shares Drop 11% After Elon Musk Moves to Terminate Acquisition

Elon Musk has backed away from his $44 billion deal to take over Twitter Inc. – and the social media giant is feeling the heat. In the aftermath of threatening legal action against Musk for abandoning their contract, Twitter’s shares plunged 11% on Monday.

The media mogul announced Friday that barring further negotiations, he’s deleting his offer to acquire Twitter due to an alleged “breach” of the merger agreement. He says that breach came about when Twitter did not provide necessary data on its bot and spam accounts, and he maintained that he and his team were not given the relevant information to conduct their own study.

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The official SEC filing noted that, “While Twitter has provided some information, that information has come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors.”

Following that filing, Twitter’s board chairman Bret Taylor responded, emphasizing (via Twitter) that “closing the transaction on the price and terms agreed upon with Mr. Musk” is the end goal, and he threatened “to pursue legal action to enforce the merger agreement.” That was followed by an official response via William Savitt of Wachtell, Lipton, Rosen & Katz in a letter made public by an SEC filing.

“Contrary to the assertions in your letter, Twitter has breached none of its obligations under the agreement, and Twitter has not suffered and is not likely to suffer a company material adverse effect. The purported termination is invalid for the independent reason that Mr. Musk and the other Musk parties have knowingly, intentionally, willfully, and materially breached the agreement,” the letter read.

“The agreement is not terminated, the bank debt commitment letter and the equity commitment letter remain in effect, and Twitter demands that Mr. Musk and the other Musk parties comply with their obligations under the agreement…. Twitter reserves all contractual, legal, and other rights, including its right to specifically enforce the Musk parties’ obligations under the agreement.”

Characteristically enough, Musk responded to the threat of a lawsuit late Sunday with a meme of him laughing increasingly hysterically. It read: “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot information. Now they want to force me to buy Twitter in court. Now they have to disclose bot information in court.”

Now, Twitter’s share price has dipped $4.16 – or 11.3% – over the weekend, down to $32.65.

It’s been a string of just the latest hiccups in Musk’s proposed Twitter Inc. takeover. The stock drop-off on Monday indicates that Wall Street investors are not keen on the social media company and Musk undergoing a lengthy legal battle.

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