Twitter shares tumble after Elon Musk leaves $44 billion valuation

Twitter shares tumbled after Elon Musk pulled out of a $44 billion deal for the social media giant.

Twitter shares tumbled $4.16, or 11.3%, to $32.65 on Monday after Musk terminated the purchase agreement alleging the target company was in breach of the merger agreement. In a letter to Twitter on Friday, Musk reiterated that the social media giant did not provide enough information about its bot and spam accounts on the platform and did not provide Musk and his team with enough data to do their own analysis.

Also on Monday, Musk posted a meme on his Twitter account mocking the social media platform’s management for threatening to sue the deal. “Now they have to reveal the bot’s information in court.” A tweet involving Cicily Musk, Read about the billionaire investor’s 101 million Twitter followers.

The sharp drop in the stock price is seen as a warning that Wall Street investors are unwilling to see a long legal battle over the Twitter deal. To make this scenario more likely, Twitter has hinted that it will sue Musk over the aborted deal to ensure the transaction goes through.

To up the legal stakes, Twitter responded to Musk’s official July 8 warning to terminate the property by issuing its own letter on July 11 from William Savitt of Wachtell, Lipton, Rosen & Katz, saying the proposed termination was “wrong.” and wrong”. ” and represented a rejection of the agreed terms of the agreement.

“Contrary to your letter, Twitter has not breached its contractual obligations and Twitter has not or is not expected to have a material adverse effect on the company. The alleged termination is invalid for the independent reason that Mr. Musk and the other parties to Musk have knowingly, intentionally, intentionally and materially violated the agreement…the agreement is not terminated, the bank debt commitment letter and equity commitment letter remain in effect. . and Twitter requires Musk and other parties to Musk to fulfill their obligations under the settlement,” Savitt said in the letter, which was disclosed through an SEC filing.

“Twitter reserves all contractual, legal and other rights, including the right to specifically enforce Musk’s parties’ obligations under the Settlement,” added Twitter’s official response, as a possible prelude to the pending lawsuit.

All of this leaves market watchers undecided about how the protracted legal battle over Twitter might play out and what effect it will have on the company’s share price.

“TWTR remains a difficult situation to predict/trade, but the desk continues to believe that the most likely outcome remains an eventual price decline. Your expected value analysis, based on a 20% chance that the deal will close at $54.20 per share, a 50% chance that the price will drop to $44.20 per share, and a probability 30% of a failed transaction suggests a current TWTR. price approx. $39.50 a share,” read a July 9 Jefferies report issued by Jefferies LLP.

The merger battle may continue amid speculation that Musk wants to renegotiate the terms of a potential acquisition of Twitter to take the company private. Otherwise, Musk could pay a $1 billion fee to exit the holding.