Tesla CEO Elon Musk and Twitter are bracing for a authorized combat after the billionaire mentioned Friday he was abandoning his $44 billion (roughly Rs. 3,37,465 crore) bid for the social media firm.

Twitter is vowing to problem Musk in courtroom to uphold the settlement. Shares of Twitter slid greater than 11 p.c on Monday. Here’s a have a look at what might occur subsequent.

Why is musk backing out?

There are lots of the reason why Musk may need had second ideas. But he alleged Friday that Twitter has failed to offer sufficient details about the variety of pretend accounts it has.

Twitter mentioned final month that it was making out there to Musk a “firehose” of public uncooked knowledge on lots of of hundreds of thousands of every day tweets. But Musk’s attorneys have argued that the corporate was offering Musk with generally “incomplete or unusable information” and fewer knowledge than it affords a few of its massive prospects.

Twitter mentioned final week it makes use of a mixture of private and non-private knowledge to find out the quantity of spam. Private person knowledge is not out there publicly and thus is not within the knowledge “firehose” that it gave Musk. That would come with IP addresses, telephone numbers and site. Twitter mentioned such personal knowledge helps keep away from misidentifying actual accounts as spam.

Twitter has mentioned for years in regulatory filings that it believes about 5 p.c of the accounts on the platform are pretend. But on Monday Musk continued to taunt the corporate, utilizing Twitter, over what he has described as a scarcity of information.

What is twitter’s response?

Twitter declared its intent to sue Musk. The firm might have pushed for a $1 billion (roughly Rs. 162 crore) breakup price that Musk agreed to pay below these circumstances. Instead, it appears able to combat to finish the acquisition, which the corporate’s board has authorized and CEO Parag Agrawal has insisted he desires to consummate.

The chair of Twitter’s board, Bret Taylor, tweeted Friday that the board is “committed to closing the transaction on the price and terms agreed upon” with Musk and “plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.”

The trial courtroom in Delaware regularly handles enterprise disputes among the many many companies, together with Twitter, which can be included there.

Who’s going to win?

It’s virtually not possible to foretell the end result of any protracted authorized battle. But legislation and enterprise specialists imagine Twitter probably has the stronger case.

Morningstar analyst Ali Mogharabi famous that Twitter has described its estimate of pretend and spam accounts for years in regulatory filings whereas explicitly noting that the quantity won’t be correct given the usage of knowledge samples and interpretation.

Given present market situations, Mogharabi mentioned, Twitter may additionally have a stable argument that the layoffs and firings of the previous weeks signify “an ordinary course of business.”

“Many technology firms have begun to control costs by reducing headcount and/or delaying adding employees,” he mentioned. “The resignations of Twitter employees cannot with certainty be attributed to any change in how Twitter has operated since Musk’s offer was accepted by the board and shareholders.”

The case might additionally finish in a settlement, as an illustration with the 2 sides negotiating a cheaper price. If Musk wins, there’s additionally the query of the $1 billion breakup price. He can actually afford it, however will he wish to pay?

What occurs to Twitter now?

The Musk saga has been, to place it mildly, a distraction for Twitter’s staff, executives and even customers. Some workers have stop, whereas others have been laid off or fired. Job affords have been rescinded and discretionary spending curtailed.

“For Twitter this fiasco is a nightmare scenario,” Wedbush analyst Dan Ives, who follows the corporate, wrote Monday. He mentioned the end result can be “an Everest-like uphill climb for Parag & Co.” given issues over worker morale and retention, advertiser issues and different challenges.”

Twitter itself is unlikely to go wherever no matter whether or not or not it adjustments arms. But if the turmoil continues it might scare away advertisers. If too many engineers and different workers go away, the platform’s high quality might endure as properly.

“The one bright spot is that if (Twitter) is ultimately victorious in the courts, it could potentially take north of the $1 billion in break-up fees that Musk could have to pay,” mentioned CFRA analyst Angelo Zino.

If he loses, will musk comply?

Even if Musk loses the courtroom case, some observers surprise if the world’s richest man will abide by the end result. That’s partially primarily based on his antagonistic strategy to unfavourable actions from the US Securities and Exchange Commission over Musk’s tweets claiming he had the funding to take Tesla personal in 2018.

That led to a securities fraud settlement with the SEC requiring that his tweets be authorized by a Tesla lawyer earlier than being revealed. But the SEC later investigated whether or not the Tesla CEO violated the settlement with tweets final November asking Twitter followers if he ought to promote 10% of his Tesla inventory.

Musk had argued that the company cannot take motion about his tweets with out courtroom authorization. This time, nevertheless, he might very properly face an precise courtroom order to pay the $1 billion breakup price — or to complete the acquisition even when he would not wish to.