Twitter shares plunged Monday after Elon Musk announced the withdrawal of his US$44 billion ($65 billion) takeover bid, setting the stage for a potential legal brawl.
Shares in the social media giant ended down 11.3 per cent at $32.65 in the first session after Mr Musk revealed late on Friday he was dropping the takeover plan.
Mr Musk followed up with a pair of mocking tweets after the company said it would sue the billionaire entrepreneur to force the deal to go through.
The series of tweets on Monday was the Tesla chief's first response since he made public his intention to ditch the offer on Friday because Twitter had breached multiple provisions of the merger agreement.
"Twitter's board must contemplate the potential harm to its employee and shareholder base of any additional internal data exposed in litigation," Benchmark analyst Mark Zgutowicz said.
Francis Pileggi, a corporate litigator with Lewis Brisbois in Delaware, said Mr Musk could put bots front and centre in the litigation if he defends against Twitter's lawsuit by claiming the company misrepresented the number of fake accounts.
"I'd be surprised if he's prohibited from getting that information," Mr Pileggi said.
Mr Pileggi said if the number of fake accounts is many times higher than the 5 per cent estimated by Twitter, it could lead to negotiations for a reduced price for the social media platform.
Twitter is planning to sue Mr Musk as early as this week and force him to complete the acquisition, people familiar with the matter told Reuters.
Legal experts say the 16-year-old social media company has a strong legal case against Mr Musk, but could opt for a renegotiation or settlement instead of a long court fight.
"We believe that Elon Musk's intentions to terminate the merger are more based on the recent market sell-off than ... Twitter's 'failure' to comply with his requests," Jefferies analyst Brent Thill wrote in a note.
"In the absence of a deal, we would not be surprised to see the stock find a floor at $23.5."
