Twitter Hit Back at Musk!

Twitter Inc (NYSE:TWTR) fired back at Elon Musk on Monday, accusing the world's richest person of "knowingly" violating the deal to buy Twitter.

In a letter sent to Musk dated Sunday and submitted to regulators on Monday, Twitter said it did not breach its obligations under the merger agreement, as Musk had indicated on Friday as he sought to end the deal. "Twitter requests that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement, including their obligations to use their reasonable best efforts to complete and consummate the transactions contemplated by the Agreement," the letter said. The company had planned to sue Musk to force him to complete the deal, a threat Musk laughed off on Monday in a series of tweets in which he joked about Twitter's threat to enforce the deal in court. Twitter plans to file a lawsuit in Delaware early this week, people familiar with the matter told Reuters. Twitter said in its letter that the merger agreement remains in effect and that it will take steps to close the deal. Twitter's shares fell 11.3% to close at $32.65, 40% lower than Musk's $54.20 offer and Twitter's biggest drop in 14 months. They recovered less than 1% in extended trading.

Tesla's shares closed down almost 7%.

Investors who shorted Twitter's falling shares made a market profit of $148 million on Monday, while short bets against Tesla generated a market profit of $1.3 billion, according to S3 Partners. "Twitter's board should consider the potential damage to its employees and shareholder base from any additional internal data disclosed in the lawsuit," Benchmark analyst Mark Zgutowicz said. Francis Pileggi, a corporate litigation lawyer at Lewis Brisbois in Delaware, said that if Musk defends against Twitter's lawsuit alleging that it misrepresented the number of fake accounts, the social media giant could bring its so-called "bot" accounts to the forefront in future lawsuits.

"I would be surprised if it is prohibited from getting this information," Pileggi said.

If the number of fake accounts is many times higher than the 5% estimated by Twitter, Pileggi said, it could lead to a lower price negotiation for the social media platform. Legal experts say the 16-year-old social media company has a strong legal case against Musk, but may prefer renegotiation or settlement to a lengthy court battle.