Twitter claims Elon Musk's move to dump $44bn takeover deal is 'invalid and unjust' as shares plummet 11% ahead of judicial battle.

• The Tesla billionaire wants to cancel the $44 billion deal due to bot accounts.
• Twitter's lawyers stated that Musk's "alleged termination is invalid and wrongful."
• The letter comes at the start of what is expected to be a lengthy legal battle between the world's richest man and Twitter as the latter seeks to enforce the agreement.

Twitter has slammed Elon Musk's attempts to abandon his $44 billion takeover of the social media giant, calling his arguments 'invalid and wrongful.'

The Tesla billionaire has stated that he wishes to cancel the agreement he reached in late April because the company allegedly vastly underestimated the number of bot accounts on the platform.

Mr. Musk's and the other Musk Parties' purported termination is invalid and wrongful, and it constitutes a repudiation of their obligations under the Agreement [to buy the company],' according to the company's lawyers Wachtell, Lipton, Rosen & Katz.

According to a letter sent to the Securities and Exchange Commission on Sunday, Twitter kept their end of the bargain and "has not suffered and is not likely to suffer a Company Material Adverse Effect."

Musk has repeatedly claimed that Twitter's estimate that 5% of accounts were bots was exaggerated - but has yet to produce evidence to back up his claim.

The letter comes at the start of what is expected to be a lengthy legal battle between the world's richest man and Twitter as the latter seeks to enforce the agreement.

After Musk tried to kill the deal on Friday, the tech titan retaliated by dragging him to Delaware Chancery Court to force the merger through.

If Twitter sues Musk for withdrawing, the company faces $1 billion in damages under the terms of the Merger Agreement.

Twitter's stock price dropped in response to the expected termination of the deal.

The company's shares were trading at $32.65 before trading began on Tuesday, down 15% from the $38.75 it closed the day at on Thursday.

Musk agreed to take the tech behemoth private in late April for $54.20 per share.

In recent days, the billionaire has repeatedly mocked Twitter's legal action against him for backing out of his $44 billion takeover with a series of memes.

Musk, 51, shared a photo of Chuck Norris at a chess board, one pawn confidently staring down a full set of black pieces.

Another appeared to mock the social media giant for taking legal action because it would require them to reveal their spam bot details, which he desired.

The comments were posted alongside images of him laughing hysterically on the right side.

However, the world's richest man avoided the subject when he spoke at the Sun Valley Conference in Idaho on Saturday, but he eventually spoke out through memes.

'They said I couldn't buy Twitter,' one of them said. Then they wouldn't reveal bot information.

'Now they want me to buy Twitter first in court.' They must now disclose bot information in court.'

'Chuckmate,' he captioned a post featuring legendary TV hardman Chuck Norris.

Musk responded to a user who mentioned the number of spambots they see on the site on a regular basis.

The South African simply wrote, 'Hellow??? @SECGov,' the Securities and Exchange Commission's Twitter handle.

Twitter hired a powerful Delaware-based law firm on Sunday to sue Musk for backing out of his $44 billion deal to buy the company.

With the hiring of Wachtell, the company gains access to former Delaware Chancery Court Chancellors Leo Strine and Bill Savitt.

Delaware's chancery courts handle non-jury proceedings that are overseen by chancellors, who are judges.

They frequently deal with business issues, with many top US firms, including Twitter, locating their corporate headquarters there even if their main offices are elsewhere.

Chancery courts cannot order punitive damages and hear cases more quickly than criminal courts, so the Twitter case is likely to be resolved within a few months.

Musk hired Emanual Urquhart & Sullivan LLP, the firm that defended him in a defamation case in 2019 and is currently representing him in a Tesla lawsuit.

The billionaire entrepreneur and Tesla and SpaceX CEO took the stage at the Allen & Co Sun Valley Conference, an annual gathering of media and technology executives in Idaho, less than 24 hours after announcing the cancellation of his $44 billion deal to buy Twitter Inc.

Musk's arrival at the conference, dubbed the "billionaires' summer camp," jolted the off-the-record event this week, where the headline-making usually occurs without the presence of the media.

The interview was conducted by Sam Altman, CEO of OpenAI, an artificial intelligence research company funded by Musk and others, as the world's richest man discussed the possibility of future life on Mars but remained silent on Twitter.

'It just appears to be an absolute mess,' said one senior media executive, who requested anonymity ahead of the interview. 'He makes his own rules...' I'd hate to be on Twitter and have to take this guy seriously.'

Sun Valley is usually covered like an athleisure version of the Met Gala, with photographers capturing the arrivals of fleece-clad media moguls and reporters noting power-lunches at the property's Konditorei cafe.

This year's five-day, invite-only conference will be held in a tiny town of 1,500 people on the outskirts of Idaho's Sawtooth National Forest from July 6 to 10.

On Friday, one Hollywood power broker expressed hope that Musk's interview would liven up the conference's staid, cerebral atmosphere this year.

Following Musk's announcement, one CEO pointed out the elephant in the room: Saturday's remarks might make Twitter CEO Parag Agrawal and Chief Financial Officer Ned Segal uncomfortable.

Musk's final public message to Agrawal was a poop emoji tweet in response to the Twitter CEO's defense of how the company accounts for spam bots.

It is unclear whether Musk met Agrawal or Segal at the Idaho event.

Musk's attorneys had delivered an eight-page letter to Twitter, announcing his intention to cancel the acquisition of the social network.

According to the document, which was filed with the Securities and Exchange Commission, Twitter failed to respond to repeated requests for information over the past two months, or to obtain his consent before taking actions that would have an impact on its business, such as firing two key executives.

Experts speculated that the move was made to reduce the price. Musk offered $54.20 per share in April, but the price had dropped to $36.81 on Friday night.

Twitter's chairman, Bret Taylor, tweeted on Friday that the board was "committed to closing the transaction" under the current terms of the deal and that they were "confident" they would win.

Musk's attorney, Mike Ringler, claimed Twitter was in material breach of multiple provisions of the agreement.

'Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations on which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect,' Ringler wrote in the documents filed with the SEC.

'While Section 6.4 of the Merger Agreement requires Twitter to provide all data and information requested by Mr. Musk and his advisors 'for any reasonable business purpose related to the consummation of the transaction,' Twitter has not met its contractual obligations.

Mr. Musk has been looking for data and information for nearly two months in order to'make an independent assessment of the prevalence of fake or spam accounts on Twitter's platform.'

'This information is critical to Twitter's business and financial performance and is required to complete the transactions contemplated by the Merger Agreement because it is required to ensure Twitter's satisfaction of the closing conditions, to facilitate Mr. Musk's financing and financial planning for the transaction, and to engage in business transition planning.'

'Twitter has failed to provide this information or has refused to provide it.' Twitter has sometimes ignored Mr. Musk's requests, sometimes rejected them for reasons that appear to be unjustified, and sometimes claimed to comply while providing Mr. Musk with incomplete or useless information.'

Musk had previously threatened to halt the transaction unless the company could demonstrate that spam and bot accounts constituted less than 5% of users who saw advertising on the social media service.

Twitter, on the other hand, immediately threatened legal action and stated that it was confident of victory.

'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,' Taylor said in a tweet.

'We are confident that we will prevail in the Delaware Court of Chancery,' says the firm. CEO Agrawal later retweeted that message.

'The Delaware courts do a pretty good job of balancing shareholder and corporate interests,' Adam Sterling told DailyMail.com.

'Twitter has consistently found itself in difficult positions here,' he added. With Elon attempting to terminate the deal, I believe they are obligated to take legal action against him under their fiduciary obligations to their shareholders. Everything is shocking but not surprising.'

Twitter's general counsel reportedly stated in an internal memo, 'Given this is an ongoing legal matter, you should refrain from Tweeting, Slacking, or sharing any commentary about the Merger Agreement.'

An anonymous Twitter employee told NBC News about the failed deal that Musk had 'f**ked destroyed the company.'

'I guess it feels like we won,' said the employee. However, it feels like the ending of the film, with the characters bloodied and bedraggled and a Michael Bay explosion behind them. We could see it coming, but in the meantime, he's f**ked up the company.'

During an all-hands meeting with employees in April, Agrawal attempted to appease workers after they demanded answers about how managers planned to handle a mass exodus prompted by Musk.

If the Musk deal went through, Agrawal would earn $42 million.

Musk's decision is likely to spark a protracted legal battle between the billionaire and the San Francisco-based company, which is 16 years old.

Rather than a judge ordering that a transaction be completed, disputed mergers and acquisitions in Delaware courts usually result in the companies renegotiating deals or the acquirer paying the target a settlement to walk away.

This is due to the fact that target companies are frequently eager to resolve the uncertainty surrounding their future and move on.

According to a person familiar with the situation, Twitter is hoping that court proceedings will begin in a few weeks and be resolved in a few months.

There is plenty of precedent for renegotiating a contract. When the COVID-19 pandemic broke out in 2020, causing a global economic shock, several companies repriced agreed-upon acquisitions.

In one case, French retailer LVMH threatened to cancel a deal with Tiffany & Co. The jewelry retailer in the United States agreed to reduce the acquisition price by $425 million to $15.8 billion.

'I'd say Twitter is well-positioned legally to argue that it provided him with all of the necessary information,' said Ann Lipton, associate dean for faculty research at Tulane Law School.

Twitter shares were down 6% in extended trading, closing at $34.58. This is 36% less than the $54.20 per share Musk agreed to pay for Twitter in April.

Twitter's stock rose after Musk bought a stake in the company in early April, shielding it from a stock market sell-off that hit other social media platforms.

However, after agreeing to buy Twitter on April 25, the stock began to fall within days as investors speculated Musk might back out of the deal. Twitter was trading at its lowest level since March after the bell on Friday.

The announcement is the latest twist in Musk's will-he-won't-he saga, which began in April when Musk agreed to buy Twitter but then put the deal on hold until the social media company demonstrated that spam bots account for less than 5% of its total users.

The contract requires Musk to pay Twitter a $1 billion break-up fee if he is unable to complete the transaction due to factors such as acquisition financing falling through or regulatory obstacles. The break-up fee, however, would not apply if Musk terminated the agreement on his own.

Musk's withdrawal from the deal, combined with Twitter's promise to fight hard to complete it, casts a pall of uncertainty over the company's future and stock price at a time when concerns about rising interest rates and a potential recession have hammered Wall Street.

Alphabet, Meta Platforms, Snap, and Pinterest's shares have dropped 45 percent on average in 2022, while Twitter's stock has dropped only 15 percent in that time, boosted in recent months by the Musk deal.

Wedbush analyst Daniel Ives said Musk's filing was bad news for Twitter.

'This is a disaster scenario for Twitter and its Board, as the company will now battle Musk in an arduous legal battle to recoup the deal and/or the $1 billion breakup fee at a minimum,' he wrote in a note to clients.

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