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

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

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. — AFP pic

Saturday, 30 Jul 2022 7:41 AM MYT

WILMINGTON, July 30 — Elon Musk countersued Twitter Inc yesterday, escalating his legal fight against the social media company over his bid to walk away from the US$44 billion (RM195.8 billion) purchase, although the lawsuit was filed confidentially.

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 October 17 to determine if Musk can walk away from the deal.

Twitter did not immediately respond to a request for comment.

Also yesterday, 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 per cent 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 US$54.20 per share. The company’s shares ended yesterday at US$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 October 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 yesterday 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 October 24. A Tesla shareholder is seeking to void as corporate waste and unjust enrichment the CEO’s record-breaking US$56 billion pay package from the electric vehicle maker. — Reuters