Evercore ISI senior general manager Mark Mahaney intervenes on Twitter by suing the billionaire businessman to “Varney & Co”.
Hindenburg Research is backing Twitter as it enters into a legal battle with Elon Musk over Tesla CEO’s decision to end its $ 44 billion acquisition of the social media giant.
Ticker Security Last Change Change% TWTR TWITTER INC. 37.74 +1.45 + 4.00%
“We have accumulated a significant long position in Twitter shares,” the short-selling company tweeted on July 13th. “Twitter’s complaint poses a credible threat to Musk’s empire.”
In a July 8 letter, Musk’s lawyers said he would abandon the deal, alleging that Twitter “materially violated several provisions” of the deal and “appears to have made false and misleading statements” when it accepted the agreement. Musk acquisition offer on April 25th. Musk has disputed Twitter’s internal estimates that spam and fake accounts account for less than 5% of its users.
Twitter responded to the letter on July 10, calling the “alleged termination” of the agreement by Musk and his team “invalid and unlawful” and constitutes a “repudiation of its obligations under the agreement.” . Two days later, the company filed a lawsuit against Musk in the Delaware Chancellery Court to force him to comply with the agreement. The Twitter complaint accuses Musk of refusing “to fulfill his obligations to Twitter and its shareholders because the agreement he signed no longer serves his personal interests.”
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“After putting on a public show to put Twitter into play, and after proposing and signing a merger agreement in favor of the seller, Musk apparently believes that he, unlike all other parties subject to contract law of Delaware, is free to change its mind, leave the garbage. company, interrupt its operations, destroy the value of shareholders and leave, “the lawsuit states.
In a May investigation note, Hindenburg said Musk threatened to move away from the Twitter deal could provide him with leverage to renegotiate his price. However, the company’s founder, Nathan Anderson, told FOX Business on Monday that Musk “has discarded much of his power, largely through compulsive and unadvised tweets.”
“The problem with the Twitter bot is perhaps the worst pretext Musk could have chosen to terminate the deal since it was clearly and publicly a reason he entered into the deal in the first place,” he said.
The company believes Musk will buy Twitter at its original offer of $ 54.20 per share, pay damages for damages in excess of $ 1 billion of the breach of the deal, or eventually settle.
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“In all of the above scenarios we see that Twitter is trading significantly higher than current levels,” predicts Anderson. “If Twitter loses directly, we see fair value in the mid-twenties.”
Twitter shares have dropped about 10% so far.
Elon Musk’s Twitter profile is displayed on the computer screen and the Twitter logo is displayed on a phone screen. (Jakub Porzycki / NurPhoto via Getty Images / Getty Images)
Despite attention to the deal, Anderson argues that the market “seems to be ignoring or underestimating the risks to Musk.”
“The market seems to mistakenly think that the litigation will last for years, that Musk only has the $ 1 billion break rate on the line, and that Twitter’s chances of winning are low,” he said. “We expect the process to move relatively quickly and Twitter to have a high probability of success beyond the $ 1 billion break rate.”
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A judge will hear arguments Tuesday morning over Twitter’s request to hold a trial in September. Twitter has called for the procedure to be expedited so that the merger agreement with Musk ends on October 25th.
In a motion Friday, Musk urged the court to reject Twitter’s “unjustifiable” request and bring forward the trial date to February 13, 2023 or later.
“Twitter’s sudden request for speed of warping after two months of dragging and obfuscation is its latest tactic to hide the truth about spam accounts long enough to make defendants close,” the Musk’s lawyers. “The basic dispute over fake and spam accounts is critical to the value of Twitter. It’s also extremely intense and requires substantial time for discovery.”
The debt financing package pledged by the banks for the acquisition of Musk expires in April 2023. This means the deal could collapse if the trial begins in February and does not end in April.
Reuters contributed to this report