Twitter shares sink 11% after Elon Musk terminates $44 billion deal
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New York: As a legal battle between Tesla Chief Executive Officer (CEO) Elon Musk and Twitter Inc. is expected to take center stage, shares of Twitter dropped about 11 percent in pre-market trading on Monday, Reuters reported.
Shares in the social media giant ended down 11.4 percent at $32.65 in the first session after Musk revealed late Friday he was dropping the takeover plan.
On Friday, Musk's attorney notified Twitter's board that he wants to cancel the deal. The billionaire has taken issue with the number of bots and fake accounts on Twitter and says the company isn't being truthful about how much activity on the service is authentic.
Twitter, on the other hand, says it has given Musk the information he needs to assess its claim that spam accounts make up only 5% of monetizable daily active users, including its so-called firehose, an unfiltered, real-time stream of daily tweets.
Twitter further pushed back against the claim, adding that it was committed to following the transaction agreement signed with Musk. Chair Bret Taylor vowed to pursue legal action in a court in the U.S. state of Delaware to force Musk to honor the deal.
Twitter is now planning to file the lawsuit against Musk as soon as this week, Reuters reported, citing people familiar with the matter.
On Monday, Musk responded to the threat with a tweet that appeared to mock the social media company, saying the suit would inadvertently force Twitter to reveal more data on fake accounts.
Under the agreed terms of the deal, Musk would need to pay a $1B fee if the deal is not completed due to lack of financing or regulatory concerns. But that fee would not apply if Musk himself instead chooses to end the purchase.
