UPDATED: Elon Musk, famous meme aficionado/internet troll and the world’s richest person, issued his first public response to Twitter’s vow that it will haul him into court to enforce the terms of his $44 billion buyout offer for the company.
Musk, just after midnight ET Sunday, tweeted a meme showing the celebrity CEO laughing at the latest turn of events. It focuses on the mega-billionaire’s central claim for bailing on the Twitter deal: that, according to Musk, the company has stonewalled on providing evidence to back up its assertion that spam and fake accounts on Twitter make up less than 5% of total daily active users.
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“They said I couldn’t buy Twitter,” the post reads, accompanied by images of a progressively more mirthful Musk. “Then they wouldn’t disclose bot info. Now they want to force me to buy Twitter in court. Now they have to disclose bot info in court.”
Twitter has hired M&A powerhouse law firm Wachtell, Lipton, Rosen & Katz to represent it in litigation against Musk, and the social media company plans to file suit against Musk early this week, Bloomberg reported.
Shares of Twitter fell 11.3% Monday, closing at $32.65/share, on news that Musk wants to bail on the deal. Musk’s original offer for Twitter was $54.20/share.
On Friday, Musk informed Twitter that he was terminating the acquisition, accusing the company of breaching its contract by (among other things) “dramatically understating the proportion of spam and false accounts.” Twitter has for years claimed that spam and bot accounts represent less than 5% of its active user base. But it’s unclear why Musk did not conduct due diligence on the issue prior to clinching the $44 billion acquisition agreement.
Twitter plans to sue Musk in the Delaware Court of Chancery. “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” Twitter chairman Bret Taylor tweeted on Friday.
Even if he prevails in his move to exit the Twitter deal, Musk may have to pay a $1 billion breakup fee to the company unless he is able to prove it significantly misled him about factors tied to the company’s value.
“While the two parties likely are facing a lengthy battle of which the final decision remains very uncertain, we believe Twitter may have the stronger case,” Morningstar senior equity analyst Ali Mogharabi wrote in a research note, adding, “We also think that a scenario remains where Musk and Twitter reach a new, lower-price agreement.”
As for how the legal fight with Musk will affect Twitter’s business, Mogharabi wrote, “Uncertainty surrounding who will be at the helm may push brand advertisers to ease their spending on the platform. However, the drama will also likely attract new users to the platform and increase engagement, especially given the upcoming midterm elections, which could convince advertisers to cut a bit less.”
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