Twitter is ready for a legal battle to force Elon Musk to buy the company.

[Follow for updates as Elon Musk has said he plans to terminate his $44 billion deal to buy Twitter.]

Elon Musk could also be getting ready for the following chapter in his Twitter takeover journey: courtroom.

He and Twitter reached a $44 billion deal in April, and the 2 sides have since been working to shut it. Mr. Musk requested data on what number of Twitter accounts are bots, and Twitter has given him entry to its “firehose,” or stream of tweets. It has continued to share extra data with him.

On Thursday, The Washington Put up reported that the deal was in jeopardy, and that Mr. Musk’s group was “anticipated to take doubtlessly drastic motion.” The article’s claims, which couldn’t be confirmed by the DealBook publication, took Twitter and its advisers unexpectedly, as a result of they didn’t contemplate the deal to be in any additional peril than at some other level in latest months.

Mr. Musk didn’t reply to a request for a remark. Twitter reiterated that it supposed “to shut the transaction and implement the merger settlement on the agreed worth and phrases.”

There are numerous “drastic” actions Mr. Musk may take, however because it pertains to the deal, there are two clear potentialities: He may ship a letter to Twitter saying he’s terminating the deal, and he may sue Twitter. These two actions would most certainly, however not essentially, occur concurrently.

There aren’t any clear grounds for Mr. Musk to attempt to break the deal, as a result of Twitter has publicly disclosed that roughly 5 p.c of its customers are bots because it went public. However he could attempt to declare that this disclosure is deliberately deceptive, a really excessive bar to fulfill legally.

In that case, Twitter may countersue. Twitter strongly believes that the deal contract is on its facet, and that it will be an uphill battle for Mr. Musk. The deal has a “particular efficiency clause,” which supplies the corporate the best to sue him and power him to finish the deal as long as the debt financing he has corralled stays intact. And even when that 5 p.c estimate is off, Twitter warns in its regulatory filings that the quantity is an estimate and that it “may very well be larger than now we have presently estimated.” The bar for utilizing that as grounds to get out of a deal is excessive.

A case may very well be heard in Delaware, the place Twitter is registered. Twitter would nearly definitely search an expedited case, given the dimensions of the deal. A doable decide is Chancellor Kathaleen St. J. McCormick, who can be overseeing the Orlando Police Pension Fund’s go well with over the deal.

The stakes are excessive. Essentially the most priceless a part of Twitter proper now’s its acquisition settlement with Mr. Musk. Its shares are down about 24 p.c since April, and commerce nicely under the value agreed with Mr. Musk. Twitter’s inventory fell 4 p.c in premarket buying and selling on Friday and was down almost 5 p.c on the shut.

Twitter is seeing stress on its promoting enterprise, has frozen hiring and is shedding some employees members. To simply accept lower than the value it initially negotiated with Mr. Musk may expose Twitter to shareholder lawsuits. So whereas litigation may very well be pricey, shedding the deal could also be even worse.