Elon Musk files counter-suit under seal for over $44 billion deal on Twitter

WILmington, Dell, July 29 (Reuters) – Elon Musk took on Twitter on Friday, escalating his legal battle against the social media company for trying to walk away from the $44 billion purchase, despite a lawsuit being filed. secretly.

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

Musk’s lawsuit was filed hours after Chancellor Kathleen McCormick of Delaware’s court of chancellor ordered a five-day trial beginning October 17 to determine whether Musk could withdraw from the deal.

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Twitter did not immediately respond to a request for comment.

Also on Friday, a Twitter contributor filed a lawsuit against Musk, asking the court to order the billionaire to close the deal, finding that he had breached his fiduciary duty to Twitter shareholders, and awarding damages for the losses he caused.

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

Musk, the world’s richest person and CEO of Tesla Inc (TSLA.O), said on July 8 that he had abandoned the acquisition and blamed Twitter Inc for breaching the agreement by misrepresenting the number of fake accounts on its platform. Read more

Twitter filed a lawsuit days later, calling the fake account claims a distraction, and saying that Musk was bound by the merger contract to close the deal at $54.20 per share. Shares of the company closed Friday at $41.61, the highest close since Musk abandoned the deal. Read more

McCormick rushed to trace the case to trial last week, saying she wanted to limit potential damage to Twitter caused by uncertainty about the deal.

Twitter blamed the court battle for plunging revenue and causing chaos within the company. Read more

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

Musk this week accused Twitter of inaction in response to his discovery requests, and Twitter accused him of seeking to obtain massive amounts of data unrelated to the main issue in the case: whether Musk violated the contract of the deal.

The chief justice in her order on Friday appeared to be anticipating disagreements over the discovery.

“This command does not resolve any specific discovery disputes, including the suitability of any requests for large data sets,” McCormick said.

Musk also faces a week-long trial in Wilmington, Delaware, starting October 24. A Tesla shareholder is seeking revocation as a waste of the company and an unfair enrichment of the record-breaking CEO pay package of $56 billion from the electric car maker.

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(Covering from Tom Hales in Wilmington, Del. Editing by Nolen Walder, Chizu Nomiyama and Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.

Tom Hals

Thomson Reuters

An award-winning reporter covering US courts and the law from the COVID-19 pandemic to high-profile criminal trials and Wall Street’s biggest failures with more than two decades of experience in international financial news in Asia and Europe.

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