Twitter Assembles Legal Team to Sue Elon Musk over Broken Buyout Deal: Report

Social media company Twitter ($TWTR) is apparently planning to sue Elon Musk, CEO of Tesla , as early as this week, according to people familiar with the matter. Musk revealed on July 8 that he intended to back out of the $44 billion deal to buy the social media giant, and as a result Twitter plans to head to court to force his hand. Reports on July 10 claim that Twitter has hired corporate law firm Wachtell, Lipton, Rosen & Katz. The Delaware Court of Chancery, a non-jury trial court that deals with corporate law in the state of Delaware, will preside over the case.

Elon Musk Pulling the Plug on the Deal and Twitter's Reaction

In a letter to Twitter on Friday, the Tesla CEO's legal team ⚖️ said that the social media platform appears "to have made false and misleading representations" when Musk agreed to buy the platform on April 25 and had "breached" numerous terms of the original deal . Musk's announcement to pull the plug follows a months-long feud with Twitter over how many spam and fake accounts exist on the platform. The Tesla CEO demanded that Twitter give information to support its internal estimate that less than 5% of the platform's accounts are "bots", "spam" or "fake accounts". Bret Taylor, the Chair of Twitter's board, responded by tweeting that the board "plans to pursue legal action to enforce the merger agreement" and "is committed to closing the transaction on the price and terms agreed upon" with Musk. Today, Musk amused his followers by posting a meme of himself and joking that the lawsuit would compel Twitter to provide information about bot activity.

Impact on Twitter's ($TWTR) Stock

A 5-day stock chart of $TWTR below the opening of the market session on Monday 11:15 UTC

On Friday, Twitter shares fell 5.1%to $36.81, well below Musk's offer of $54.20. Musk's decision to leave may cause the company to be viewed as a stock to avoid in the eyes of other investors or potential acquirers. Twitter shares fell nearly 6% in after-hours trading on Friday and are expected to fall another 7.25% in pre-market trading to $34.14.

Impact on Tesla's ($TSLA) Stock

A 5-day stock chart of $TSLA below the opening of the market session on Monday at 11:15 UTC.

Meanwhile, Tesla's shares climbed 2.54%⏫ to $752.29 and are expected to trade at $758.58 in pre-market, which indicates a 0.84% increase in price. This signifies that the news doesn't negatively impact Tesla's shares and, as usual, Tesla stock is unmoved by the Twitter and Musk saga.

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End of the road for Twitter and Musk?

After much back and forth since Musk announced his intentions to buy Twitter in April, it seems the courtroom is where both parties would seal the deal. Musk's attempt to buy the company has seen a fluctuation in prices of $TWTR stock over the past three months, and his threat to pull the plug might see a great fall in share prices. We would have to wait to see how this one plays out and its impact on Shareholders.

Summary

• Following Musk's announcement to terminate the deal to buy Twitter, The company has reportedly hired big-hitter law firm Wachtell, Lipton, Rosen & Katz. ‍⚖️
• According to sources, the social media company intends to sue Musk in Delaware early this week.
• Twitter shares plunged after the announcement by Musk's legal team. ⚖️

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