In a letter to Musk filed last night, Twitter representatives said Musk’s decision was “invalid and wrongful.”
“Twitter demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement,” the letter said.
Musk hit back at the letter, posting a picture of a character from the video game Elden Ring brandishing a sword.
The billionaire said he wants out, claiming Twitter has not been clear about how many of its accounts are “bots” – spam accounts. Twitter has hired hotshot New York legal firm Wachtell, Lipton, Rosen & Katz to hold him to the original terms of his offer — a $54.20 a share deal.
With uncertainty clouding the business, Twitter shares dropped 11% yesterday to $32.65, dramatically below the value of the bid.
The stock is down 30% since Musk unveiled his bid earlier this year. They have halved in the last year and some analysts predict they could halve again.
In May he began to have doubts and said the deal was on hold, claiming he did not realise how many Twitter accounts are fake. Twitter says bots represent less than 5% of the 450 million total.
A month ago Musk complained to the Securities & Exchange Commission that Twitter had failed to be upfront about its business, including the spam accounts. Now he wants out altogether.
Neil Wilson at markets.com said: “It could be the bots, but probably not. It’s most likely the valuation — the Nasdaq has plunged since the deal was inked, so Twitter is by any normal model worth a lot less than $44 billion today. Also, Tesla’s stock, upon which Musk’s wealth rests, is down more than a quarter since the deal was signed.”
The case seems likely to go to court at this point. One possibility is that the Delaware Court of Chancery, where it would be held, allows Musk to walk away but tells him to pay up a $1 billion break clause fee.
Bob Hoffman, a US advertising guru and tech blogger, said: “Musk is hiding behind this ‘5% fake’ horsesh** to mask the fact that the price he and his partners agreed to pay is way more than Twitter is worth. It’s all a game, and I predict he’s going to lose big.”
Musk himself has more than 100 million followers. He has used Twitter often to make announcements about Tesla and lately, joke about his growing family after it emerged he had twins with one of his executives last year. He has 10 children, prompting Twitter jibes that his child support bills are now so high he realised he can’t afford the takeover deal.
The row with Twitter pits Musk against fellow tech billionaire Jack Dorsey, the Twitter founder and former CEO.