Twitter has signaled it’s ready to sue Elon Musk after the world’s richest man pulled out of his $44 billion agreement to buy the social media platform, and Musk is already savaging the company with mocking memes.
Musk’s long-running flirtation with buying Twitter and taking it private abruptly came to an end after Musk said on Friday that Twitter wasn’t being honest about the number of spam bots on the micro-blogging site and abandoned the deal, spurring Twitter to threaten legal action to enforce the agreement.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” tweeted Twitter’s chairman, Bret Taylor, less than an hour after Musk’s legal team said he wanted out of the deal in a filing with the Securities and Exchange Commission. “We are confident we will prevail in the Delaware Court of Chancery.”
Early Monday, Musk tweeted four images of him laughing next to captions that read: “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot information. Now they want to force me to buy Twitter in court. Now they have to disclose bot information in court.”
Those tweets were followed by a picture of action movie icon Chuck Norris playing chess with only a single pawn on his side of the board, and a complete set of pieces on the other side, with Musk tweeting, “Chuckmate.”
The Verge has more background on the doomed Musk/Twitter deal here:
When Musk and Twitter first signed the deal, both sides agreed to pay a $1 billion termination fee in the event that either backed out for specific reasons. Musk agreed to pay the fee if he isn’t able to secure the funding he needs to complete the takeover — which, so far, he hasn’t. And Twitter agreed to pay the fee if it found another buyer or its board recommended that stockholders vote against Musk’s offer.
Since Musk is claiming that Twitter breached the terms of the deal by not being forthcoming about critical business information as it pertains to bots, it’s clear he is trying to get out without paying anything. The breakup fee isn’t mentioned in the filing with the SEC on Friday outlining his rationale for backing out of the deal.
But MarketWatch reports that the oft-reported $1 billion breakup fee isn’t exactly accurate, as Musk could still write off $400 million of that billion-dollar hit if he walks away.
“It’s good to keep in mind that the payment would be treated as a capital loss, which [Musk] can use to offset capital gains he realized upon his recent sales of some of his portfolio holdings,” says accounting expert Robert Willens. “If that capital loss can offset short-term capital gains, the real cost of the termination fee would be reduced by about 40% of its face amount.”
In the meantime, Twitter’s stock prices are sinking in the wake of the news that Musk has abandoned the deal.
Shares fell 5.3% to $34.95 in premarket trading Monday, on track to erase about $1.4 billion in market value, after Musk backed out of his agreement to buy the company and take it private. Shares in Tesla, Musk’s electric carmaker, surged 1% after swinging between gains and losses.
No word on whether the collapsed Twitter deal will affect Musk’s chances of becoming the world’s first trillionaire by 2024.
