Elon Musk files countersuit under seal vs Twitter over $44 bln deal

Musk's lawsuit was filed hours after Chancellor Kathaleen McCormick of the Delaware Court of Chancery ordered a five-day trial beginning Oct. 17 to determine if Musk can walk away from the deal.

Published - July 30, 2022 12:48 pm IST

An image of Elon Musk is seen on smartphone placed on printed Twitter logos in this picture illustration taken

An image of Elon Musk is seen on smartphone placed on printed Twitter logos in this picture illustration taken | Photo Credit: Dado Ruvic

Elon Musk countersued Twitter Inc on Friday, escalating his legal fight against the social media company over his bid to walk away from the $44 billion purchase, although the lawsuit was filed confidentially.

(Sign up to our Technology newsletter, Today’s Cache, for insights on emerging themes at the intersection of technology, business and policy. Click here to subscribe for free.)

While the 164-page document was not publicly available, under court rules a redacted version could soon be made public.

Musk's lawsuit was filed hours after Chancellor Kathaleen McCormick of the Delaware Court of Chancery ordered a five-day trial beginning Oct. 17 to determine if Musk can walk away from the deal.

Twitter did not immediately respond to a request for comment.

Also on Friday, Musk was sued by a Twitter shareholder who asked the court to order the billionaire to close the deal, find that he breached his fiduciary duty to Twitter shareholders and award damages for losses he caused.

Musk owes a fiduciary duty to Twitter's shareholders because of his 9.6% stake in the company and because the takeover agreement gives him a veto of many of the company's decisions, according to the lawsuit, which seeks class status. The lawsuit was filed by Luigi Crispo, who owns 5,500 Twitter shares, in the Court of Chancery.

Musk, the world's richest person and chief executive of Tesla Inc, said on July 8 he was abandoning the takeover and blamed Twitter Inc for breaching the agreement by misrepresenting the number of fake accounts on its platform.

Twitter sued days later, calling the fake account claims a distraction and saying Musk was bound by the merger contract to close the deal at $54.20 per share. The company's shares ended on Friday at $41.61, the highest close since Musk abandoned the deal.

McCormick fast-tracked the case to trial last week, saying she wanted to limit the potential harm to Twitter caused by the uncertainty of the deal.

Twitter has blamed the court fight for slumping revenue and causing chaos within the company.

The two sides had basically agreed to an Oct. 17 trial, but were at odds over the limits of discovery, or access to internal documents and other evidence.

Musk accused Twitter this week of dragging its feet in response to his discovery requests, and Twitter accused him of seeking huge amounts of data that are irrelevant to the main issue in the case: whether Musk had violated the deal contract.

The chief judge in her order on Friday appeared to anticipate discovery disputes to come.

"This order does not resolve any specific discovery disputes, including the propriety of any requests for large data sets," said McCormick.

Musk also faces a week-long trial in Wilmington, Delaware, beginning Oct. 24. A Tesla shareholder is seeking to void as corporate waste and unjust enrichment the CEO's record-breaking $56 billion pay package from the electric vehicle maker.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.