Twitter shares fall over 6% as Elon Musk's stalled deal reaches a legal snag.

Twitter shares fall over 6% as Elon Musk's stalled deal reaches a legal snag.

Elon Musk said on Friday that he was cancelling the contract to acquire Twitter because the firm had violated many terms.

Twitter shares fall over 6% as Elon Musk's stalled deal reaches a legal snag.

Twitter shares fell almost 6% in premarket trading on Monday, as a court battle between Elon Musk and the social media business is set to take center stage after the world's richest person backed out of the $44 billion transaction.

Musk, Tesla's CEO, said on Friday that he was cancelling his proposal to purchase Twitter because the firm had violated several clauses of the merger agreement.

According to those familiar with the case, Twitter is [planning] to sue Musk as early as this week and compel him to finish the acquisition.

Musk's tweets were his first public comment since the news on Friday.

Twitter shares closed Friday at $36.81, a 32% discount to Musk's $54.20  proposal, as they were hammered by a twin whammy of a drop in the overall equities market and investor uncertainty about the acquisition.

"We believe Elon Musk's plan to terminate the merger is predicated on the current market sell-off more than Twitter's 'failure' to comply with his conditions," Jefferies analyst Brent Thill wrote in a note.

"In the absence of a deal, we wouldn't be shocked if the stock found a floor at $23.5."

The contract requires Musk to pay Twitter a $1 billion  break-up fee if he is unable to complete the transaction due to factors such as purchase funding falling through or authorities banning the transaction. The break-up fee, however, would not apply if Musk terminated the agreement on his own.

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