Twitter (TWTR) shares moved higher Wednesday after it sued billionaire Tesla (TSLA) CEO Elon Musk in a Delaware court for attempting to back out of his $44 billion takeover of the social media group.
The stock was pushed to the top of the S&P 500 leaderboard, as well, after noted short seller Hindenburg Research said it had accumulated a 'significant' long position in Twitter, noting that its court case poses a 'credible threat' to Musk's business empire.
Twitter accused Musk of secretly amassing shares prior to revealing his takeover ambitions in early April in order to buy it on the cheap, disparaging the group's leadership and technological nous and then attempting to walk away from his contractual obligations when the market turned against him.
The group has asked for a four-day hearing in early September, during which is hopes to convince the presiding judge to force Musk, by some measures the world's richest man, to complete the transaction at the proposed price of $54.20 per share.
"Musk apparently believes that he -- unlike every other party subject to Delaware contract law -- is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away," the Twitter suit read. "For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke."
Twitter shares were marked 6.2% higher in early Tuesday trading to change hands at $36.10 each. Tesla shares were marked 0.4% higher at $702.05 each.
Musk backed out of the deal last week, accusing Twitter of hiding the true extent of so-called 'bot' accounts on the platform and failing to co-operate with his requests to audit them.
Musk's commitment to the takeover was questioned within weeks of unveiling of his $44 billion takeover agreement in early April, which followed a late reporting of his holdings in the group and a change-of-heart in terms of his long term intentions.
Musk appeared to breach at least a portion of the agreement's terms when he Tweeted criticism of the company's decision to censor pre-election reports on Hunter Biden, President Joe Biden's son, and his linked to business leaders in China and Ukraine.
He doubled-down on that risk with another message to his 100 million-plus followers, alleging that former President Donald Trumps 'Truth Social' media group "exists because Twitter censored free speech."
Securities and Exchange Commission filings published in late April indicate that Musk, by some measures the world's richest man, will be required to pay a $1 billion termination fee if his effort to buy Twitter and take it private fails.
Twitter is also required to pay Musk a similar amount, the filings indicated, although both sides will have the option of walking away if the takeover isn't completed by October 24. Twitter is also able to accept -- but not solicit -- a superior bid to Musk's if one is proposed.
