Twitter shares fall as Elon Musk backs out of deal

Image source, Getty Images

The social media platform's shares fell on Monday after Musk said he was pulling out of the deal.

Mr Musk claimed that there wasn't enough information on the number of fake accounts and the amount of junk mail on the site.

A top US law firm has been hired to fight the deal.

Mr Musk said that it would be necessary to close bot info in court.

A picture of American actor and martial artist Chuck Norris at a chessboard was posted on the multi-billionaire's social media accounts.

The takeover price agreed by Mr Musk and the board of Twitter was $54.20 a share in April.

It is the first time that investors have been able to react to a Musk announcement.

The deal to buy Twitter was put on hold due to a dispute over the number of fake accounts on the platform.

The original merger agreement included a $1 billion break-up fee, but instead of trying to get Mr Musk to pay it, they want him to compete the deal. The board is committed to closing the deal on the price and terms agreed upon with Mr Musk, according to the chairman.

One of the world's leading corporate law firms has been hired by the social networking site.

Mr Musk didn't have a great legal argument, according to John Coffee, a professor at a law school.

He predicted that it would be quietly settled. I think Mr Musk doesn't think he's going to win. I think he wants to knock another 10 or 20 billion off the price he agreed to pay.

When he first agreed to the deal, Mr Musk said he wanted to make the site better by defeating the spammers. There is an issue with automated, so-called "Bots" being used to post misleading or incorrect information.

The businessman asked for evidence to support the company's claim that less than 5% of its users are involved in bot activity. Up to 20% or more of users could be made up of fake accounts.

The electric car firm's share price fell after Mr Musk agreed to buy it. The sale of shares in the company led to speculation that the funds raised would be used to finance the deal.

When stock markets turned, Mr Musk "kind of got cold feet" and it looked like his wealth was impacted when the price of his company's stock fell, according to Ann Lipton, a litigator who has handled class actions involving some of the world's largest companies.

She said that merger agreements are difficult to get out of. Even if there was a false representation, Musk claims that it was not true. It's not possible to get out of the deal just for that.

Image source, Getty Images

Mr Musk is also the founder of the company that makes rockets. He promised to loosen the company's content moderation rules once he was in charge.

He has been a critic of the ban of Donald Trump's account.

The platform currently allows some to be promoted and given wider audiences, but Mr Musk wants more transparency over that.