(Reuters) – Elon Musk on Monday mocked Twitter Inc’s threat to sue him following his move to abandon the $44 billion takeover deal, tweeting the social media firm 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 bid, as the company faces a double whammy of a slump in the broader equity market and investor skepticism over the deal. Tesla Inc shares were down 6% at $706.16.
The series of tweets on Monday was Tesla chief’s first response since he made public his intention to ditch the offer on Friday because Twitter had breached multiple provisions of the merger agreement. (https://bit.ly/3uCUPvd)
“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.
(Graphic: Twitter shares reaction to Musk’s $44 billion bid: https://graphics.reuters.com/TWITTER-SHARES/gkvlgygawpb/Pasted%20image%201657533508374.png)
Francis Pileggi, a corporate litigator with Lewis Brisbois in Delaware, said Musk could put bots front and center in the 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% estimated by Twitter, it could lead to negotiations for a reduced price for the social media platform.
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.
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.”
(Reporting by Tom Hals in Wilmington, Delaware, Medha Singh and Akash Sriram in Bengaluru; Editing by Anil D’Silva)