Twitter Uses Elon Musk Tweets Against Him in Buyout Lawsuit
Twitter Inc. filed a 62-page complaint in response to billionaire Elon Musk’s decision to back out of his proposed $44 billion acquisition of the firm. The owner of the social network claims that Musk significantly violated the terms of the original agreement and provides specific instances of this, including tweets from Musk himself.
No less than 13 tweets from Elon Musk are cited in Twitter’s lawsuit to illustrate the arc of the billionaire’s obsession with the service, which began with the joke “love me tender” before his April offer. Later, after Twitter CEO Parag Agrawal explained how the firm determines the number of bot accounts on the network, Musk responded by sending an emoji of a poop in response.
Elon Musk has tested Twitter Inc. to the limit during the past few months. However, some investors continue to hang onto the shares in the hopes that the deal disaster would turn out well.
After Musk stated he wanted out of the deal this week, Twitter fell even farther below his $54.20 offer, but the stock price is still factoring in the potential that the two parties might come to an agreement on a deal at a lesser price. MKM Partners analysts said on Monday that if investors believe the transaction won’t take place at all, the stock could drop as low as $24. That would be a further decline of 30% from Tuesday’s closing price of $34.06.
One indication that some traders are persevering: Shares are holding up better than peers in this year’s tech crash, even after Musk declared he was cancelling the $44 billion transactions, which led Twitter to sue him. Twitter is down 21%, compared to Meta Platforms Inc., the parent company of Facebook, which is down 51%, and Snap Inc., which is down a staggering 70%.
Many merger arbitrage speculators have long held the view that Musk’s ultimate objective is to acquire Twitter and that his recent negotiating tactics have been directed at obtaining a lower price. There are now several possible outcomes for the drama, including a swift trial, a long legal dispute, or a settlement with a lesser fee.
According to Julian Klymochko, founder and CEO of Accelerate Financial Technologies Inc., an investment company that manages an arbitrage fund, Twitter is still “may be a smart play.” Before Twitter launched its lawsuit against Musk on Tuesday, Klymochko predicted that there is a 40% possibility that the sale would be completed at a discount and a 10% chance that it will finish at the original acquisition price.
Nevertheless, the majority of Wall Street analysts — 32 of the 37 analysts tracked by Bloomberg — rate the company as a hold, thus Musk’s most recent move hasn’t resulted in any downgrades.