News World US Twitter hits back at Musk over deal doubt

Twitter hits back at Musk over deal doubt

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Twitter has fired back at Elon Musk, accusing the world’s richest person of “knowingly” breaching an agreement to buy the social media business, days after the Tesla CEO sought to back out of the $US44 billion ($64 billion) deal.

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

“Twitter has not suffered and is not likely to suffer a Company Material Adverse Effect,” it said.

The company has planned to sue Mr Musk to force him to complete the deal, a threat he laughed off on Monday.

Twitter was planning to file a lawsuit early this week in Delaware, people familiar with the matter told Reuters.

The social media giant also said in the letter the merger agreement remained in place, adding it would take steps to close the deal.

Twitter’s shares ended down 11.3 per cent at $US32.65 on Monday, a 40 per cent discount to Mr Musk’s $US54.20 bid and the biggest daily percentage drop in more than 14 months.

They rose about 1 per cent in extended trading, while Tesla’s shares closed down 6.6 per cent.

“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 Mr Musk could put bots front and centre in the litigation if he defended 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,” Mr Pileggi said.

Mr Pileggi said if the number of fake accounts was many times higher than the 5 per cent 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 Mr 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.”