After Elon Musk declared he was
terminating a $44 billion (£36 billion) bid to purchase the social media site,
Twitter shares dropped on Monday.
Mr. Musk withdrew after alleging
that Twitter had not provided sufficient details regarding the quantity of spam
and phony accounts that were present on the platform.
Twitter has retained a premier US
law firm and wants to file a lawsuit to force the purchase through.
In a tweet, Mr. Musk stated that Twitter would have to
"disclose bot information" in court.
The multi-billionaire then tweeted a picture
showing American actor and martial artist Chuck Norris at a chessboard, with a follow up post
saying "Chuckmate".
As
Monday's trading came to a conclusion, the share price of Twitter was roughly
$32.64; this is a further decline from the takeover price of $54.20 per share
that Elon Musk and Twitter's board had agreed upon in April.
Investors
can now respond to Mr. Musk's declaration on Friday that he wants to back out
of the agreement for the first time.
Tesla
CEO Elon Musk announced ambitions to purchase Twitter in April, but the deal
was shelved a month later over concerns about the prevalence of bogus accounts
on the platform.
The
original merger agreement calls for a $1 billion (£830 million) break-up fee,
but Twitter wants Elon Musk
to compete the deal rather than insisting that he pay the cash. Twitter's
chairman Bret Taylor tweeted, "The Twitter board is dedicated to closing
the transaction on the price and terms agreed upon with Mr. Musk."
One
of the top corporate law firms in the world, Wachtell Lipton Rosen & Katz
in New York, has been hired by Twitter.
Professor
John Coffee, a former adviser to the Nasdaq and the New York Stock Exchange,
told the BBC that Mr. Musk didn't have a "strong legal argument."
It
will be a major conflict, but, according to him, it will be peacefully
resolved. "I believe Mr. Musk does not anticipate winning. He probably
wants to reduce the sum he promised to pay by another 10 or 20 billion."
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Mr.
Musk stated when the contract was first reached that he sought to improve the
website by "beating the spam bots and authenticating all humans."
Twitter has long struggled with artificial "bots" that continuously
post inaccurate or harmful content.
The
businessman had requested proof to support the company's claim that less than
5% of its users are spam and bot accounts.
According
to Mr. Musk, up to 20% or more of users may be made up of spam or automated
accounts.
Shares
in Mr. Musk's electric vehicle company Tesla plummeted by almost 20% after he
initially agreed to buy Twitter in April. There was subsequently talk that Mr.
Musk might use the approximately $8.5 billion (£6.8 billion) raised to help
finance the transaction.
When
the markets changed, Mr. Musk "sort of had cold feet," according to
Ann Lipton, a litigator who has handled class actions involving some of the
biggest corporations in the world. She added that it "appeared like his
wealth was harmed when Tesla's stock price declined as well."
He
is currently looking for a way out, but merger agreements are extremely
difficult to exit, she continued. "Musk asserts that Twitter
misrepresented the volume of spam on the network, even if there was a false
representation as he alleges. You cannot break the agreement because of that
alone."
Given
its early resistance to having Mr. Musk lead it, Twitter's apparent belief that
it can still exert pressure on the richest man in the world is astonishing.
Despite
the $1 billion termination fee appearing to be little change to a
multibillionaire, neither side wants to pay it.
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