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Twitter hits back at Musk, says no deal obligations breached

Stock Markets Jul 12, 2022 06:07AM ET
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2/2 © Reuters. FILE PHOTO: Elon Musk's Twitter profile is seen on a smartphone placed on printed Twitter logos in this picture illustration taken April 28, 2022. REUTERS/Dado Ruvic/Illustration/ 2/2
 
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(Reuters) - Twitter Inc (NYSE:TWTR) 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 (NASDAQ:TSLA) Inc chief sought to back out of the $44 billion 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. (https://

"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% at $32.65, a 40% discount to Musk's $54.20 bid and the biggest daily percentage drop in more than 14 months. They rebounded less than 1% in extended trading.

Tesla's shares closed down almost 7%.

Traders short selling Twitter's tumbling stock made $148 million in mark-to-market profits on Monday, while short bets against Tesla resulted in $1.3 billion 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.

(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 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% 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."

Twitter hits back at Musk, says no deal obligations breached
 

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Comments (7)
William Smith
William Smith Jul 12, 2022 12:29AM ET
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Musk will win this one easily.
William Riley
William Riley Jul 11, 2022 11:41PM ET
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fake accounts, shadow banning, Musk wants transparency, Twitter is a fraud
ForgiveForget
ForgiveForget Jul 11, 2022 9:45PM ET
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people spread lies on Twitter and melon lies all the time.
John Laurens
John Laurens Jul 11, 2022 9:24PM ET
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Problem is that twatter is filled with chronic habitual bold faced liars. EVERYONE knows that. Sooo, sorry, but it's laughable that they are saying that they're suddenly telling the truth. That's rich and precious..
John Laurens
John Laurens Jul 11, 2022 6:35PM ET
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Reuters and all the snowflake libs freaked out when he said was buying it, now they're freaking out that he's not buying it.. This is what happens when a culture abandons meritocracy and starts giving trophies to everyone.. Just sad and pathetic.
Zen Cat
LittleZenCat Jul 11, 2022 11:34AM ET
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I have a feeling Musk will start building his 51% position when prices hit 17 bucks. He'll have decabillions of the sum he appropriated, to spare. Then he can saunter into the board room and show those guys whose boss before they sell their remaining share to him in disgust. LOL.
Andrew Ulferts
Andrew Ulferts Jul 11, 2022 9:01AM ET
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There is no floor for Twitter stock. They refused to tell Elon how many bots are on their platform. Now that they have gone ahead with a lawsuit, they have to show the court how many bots they have. Brilliant. He just purposefully destroyed that corrupt sewer of a company.
Brad Albright
Brad Albright Jul 11, 2022 9:01AM ET
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My hero Donald Trump just called Elon Musk a bull.snit artist.
Jurgen Daub
Jurgen Daub Jul 11, 2022 9:01AM ET
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hey, listen who is talking.
Brad Albright
Brad Albright Jul 11, 2022 9:01AM ET
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Jurgen Daub I know. It's a real dilemma. Which conman should I believe?
Co Gonz
Co Gonz Jul 11, 2022 9:01AM ET
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Brad Albright fauci.. oh wait
 
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