The price of Twitter shares went down on Monday after Elon Musk said he was going to back out of a deal to buy the social media site for $44 billion (£36 billion).
After complaining that Twitter had not given him enough information on the volume of spam and phony accounts on the service, Mr. Musk withdrew his claim.
A major US law firm has been retained by Twitter, which plans to file a lawsuit to force the purchase through.
According to Mr. Musk’s post, Twitter will have to “disclose bot information” in court.
The multi-billionaire then tweeted an image of American actor and martial artist Chuck Norris in front of a chessboard along with the words “Chuckmate.”
In the early hours of Monday trading, Twitter’s share price was at $34.40, further deviating from the buyout price of $54.20 per share that Elon Musk and the board of directors of the company agreed to in April.
Investors are now able to respond for the first time to Mr. Musk’s revelation that he wants to back out of the agreement on Friday.
In April, Mr. Musk, the CEO of the electric vehicle manufacturer Tesla, revealed plans to purchase Twitter. But a fight about how many fake accounts were on the network stopped the sale for a month.
The original merger agreement calls for a $1 billion (£830 million) break-up fee, but rather than insisting that Mr. Musk pay it, Twitter wants the businessman to compete in the transaction. According to a post from Twitter’s chairman, Bret Taylor, “the board is committed to closing the transaction at the price and terms agreed upon with Mr. Musk.”
A renowned corporate law firm from New York, Wachtell, Lipton, Rosen & Katz, has been hired by Twitter.
Mr. Musk didn’t have a “strong legal argument,” according to John Coffee, a professor at the Colombia Law School and a former counsel to the Nasdaq and the New York Stock Exchange.
When he first agreed to a deal, Musk stated that he wanted to improve the website by “beating the spam bots and authenticating all humans.” Twitter has had a problem for a long time with “bots” that post misleading or useless information over and over again.
The company’s claim that less than 5% of its users are spam and bot accounts was challenged by the businessman, who requested proof to support the claim. Approximately 20% or more of users, in Mr. Musk’s estimation, may be made up of spam or automated accounts.
Shares in the electric car company plummeted by almost 20% after Mr. Musk initially agreed to purchase Tesla in April. It was then thought that Mr. Musk sold about £6.8 billion ($8.5 billion) worth of Tesla shares to help pay for part of the purchase.
Ann Lipton, a lawyer who has handled class actions involving some of the biggest corporations in the world, claimed that when stock markets shifted, Elon Musk “sort of had cold feet” and that it “appears like his wealth was harmed when Tesla’s stock price fell as well.”
Twitter didn’t want Mr. Musk to run it at first, so it’s surprising that it seems to think it can still get the world’s richest man to do what it wants.
As little as the $1 billion termination fee may seem to a multi-billionaire, neither party wants to pay it.
Mr. Musk is not only the CEO of Tesla, but he also founded SpaceX, a rocket firm. He had vowed to relax Twitter’s content control guidelines once he acquired the business. He referred to himself as an “absolutist of free expression.”
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His criticism of Twitter’s decision to block some accounts, including that of former US President Donald Trump, dates back a while.
Mr. Musk has criticized a system that lets some tweets get more attention and reach more people. He has also asked for more transparency.
