effort to terminate his deal to buy
sent shares of the social-media company falling in premarket trading, as investors prepare for what is expected to be a messy courtroom battle.
Twitter fell 6.5% in recent premarket trading Monday to $34.41, putting shares on pace for their biggest drop in nearly two months. The move follows Mr. Musk’s disclosure to securities regulators Friday that he is seeking to abandon his $44 billion deal to buy Twitter and take it private, saying that the company hasn’t provided the information he needs to assess the prevalence of fake or spam accounts.
At its premarket price, Twitter shares are trading about 37% below the $54.20-a-share price at which Mr. Musk agreed to buy the company in April, marking a stunning turnaround for what has been considered the buzziest deal of the year. Its shares are also trading below where they were in early April before Mr. Musk took a surprise 9% stake in the company, which officially kicked off his takeover attempt.
When Mr. Musk began buying shares of Twitter earlier this year, the market was in a different mood and technology stocks were still largely treading water, despite concerns about inflation. Now, the technology-focused Nasdaq Composite is down 26% for the year, as investors have dumped shares of tech behemoths and nonprofitable growth companies alike. Twitter also faces a darkening outlook for digital advertising, and, just last week, laid off 30% of its recruitment team.
In his bid to terminate the deal, Mr. Musk said Friday that Twitter had violated the agreement, arguing that it was making critical changes to the ordinary running of the business without his consent. He also accused the company of withholding data from him. Mr. Musk doubled down on his view in the early hours of Monday with a series of characteristic memes and replies to users on Twitter.
Twitter has said previously that it has and will continue sharing information with Mr. Musk. The company now says it will pursue legal action, arguing Mr. Musk is required to close the agreed-on deal.
Investors, lawyers and onlookers are bracing for what could be one of the most unusual legal battles in corporate takeover history—a drama reflected in Twitter’s gyrating stock. As of Friday, the social-media company had lost more than $11 billion in market value from its closing high of $51.70 in April.
shares ticked down 0.5% premarket after rising earlier in the session. Mr. Musk is chief executive of the electric-car maker and sold Tesla stock this year after agreeing to buy Twitter.
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