Hindenburg Research is backing Twitter as it enters a legal battle with Elon Musk over the Tesla chief executive’s decision to end his $44 billion takeover of the social media giant. Ticker Security Last Change %TWTR TWITTER INC. 38.40 +0.95 +2.54% “We have accumulated a significant positive position in Twitter stock,” the short-selling firm wrote on July 13. “Twitter complaint poses credible threat to Musk’s empire”. In a July 8 letter, Musk’s lawyers said he would leave the deal, arguing that Twitter is “in material breach of multiple provisions” of the deal and “appears to have made false and misleading statements” when it accepted Musk’s April 25 buyout offer. Musk disputed Twitter’s internal estimates that spam and fake accounts make up less than 5% of its users. Twitter responded to the letter on July 10, calling the “purported termination” of the agreement by Musk and his team “void and illegal” and a “waiver of their obligations under the agreement.” Two days later, the company filed a lawsuit against Musk in Delaware District Court in an attempt to force him to follow through on the deal. Twitter’s complaint accuses Musk of refusing to “fulfill his obligations to Twitter and its shareholders because the agreement he signed no longer serves his personal interests.” ELON MUSK SEEKS TO BLOCK TWITTER’S REQUEST FOR FAST TRIAL “Having made a public spectacle of bringing Twitter into play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that—unlike any other party subject to Delaware contract law— he is free to change his mind. company, disrupt its operations, destroy shareholder value and exit,” the lawsuit states. In a research note in May, Hindenburg said Musk’s threat to back out of the Twitter deal could give him leverage to renegotiate his price. But company founder Nathan Anderson told FOX Business on Monday that Musk “has squandered much of his leverage, largely through inappropriate, coercive tweets.” “The Twitter bot issue is probably the worst pretext Musk could have chosen to end the deal, given that it was clearly and publicly a reason he signed the deal in the first place,” he said. The company believes that Musk will either buy Twitter at its initial offer of $54.20 per share, pay damages in excess of the $1 billion breakup fee that the deal provided or eventually settle. ELON MUSK TWITTER SAGA LIKELY TO CONTINUE: ‘NO PRECEDENT’ FOR THIS, EXPERT SAYS “In all of the above scenarios we see Twitter trading significantly higher than current levels,” Anderson predicts. “If Twitter loses outright, we see fair value in the mid-20s.” Shares of Twitter are down about 10% year to date. Elon Musk’s Twitter profile is displayed on a computer screen and the Twitter logo is displayed on a phone screen. (Jakub Porzycki/NurPhoto via Getty Images/Getty Images) Despite attention to the deal, Anderson argues that the market “seems to be ignoring or underestimating the risks to Musk.” “The market appears to mistakenly believe that the litigation will drag on for years, that Musk only has his $1 billion break-even fee on the line, and that Twitter’s chances of winning are slim,” he said. “We expect the process to move relatively quickly and that Twitter has a strong chance of succeeding beyond the $1 billion break-even fee.” GET THE FOX BUSINESS ON THE GO BY CLICKING HERE A judge will hear arguments Tuesday morning on Twitter’s request to go to trial in September. Twitter requested that the process be expedited because the merger agreement with Musk expires on October 25. In a motion Friday, Musk urged the court to reject Twitter’s “unreasonable” request and move the trial date to Feb. 13, 2023, or later. “Twitter’s sudden request for warp speed after two months of drifting and obfuscating is its latest tactic to obfuscate the truth about the spam accounts long enough for the defendants to be shut down,” Musk’s lawyers wrote. “The core controversy about fake and spam accounts is fundamental to Twitter’s value. It’s also highly expert and takes significant time to discover.” The debt financing package committed by the banks to buy Musk expires in April 2023. That means the deal could fall apart if the test starts in February and isn’t completed by April. Reuters contributed to this report