Twitter questions banks over Musk’s attempt to sabotage $44 billion deal

In this illustration of a picture taken on April 28, 2022, Elon Musk’s Twitter profile can be seen on a smartphone. REUTERS/Dado Ruvic/Illustration

WILMINGTON, Delaware, Aug 2 (Reuters) – Twitter Inc (TWTR.N) is trying to find evidence that Elon Musk tried to derail its $44 billion takeover of the social media company financing, while also investigating the motives of his support. Exit the deal, legal experts say.

Twitter this week sent numbers to global banks including a Morgan Stanley (MS.N) unit, deal co-investors including an affiliate of Brookfield Asset Management (BAMa.TO) and Musk advisers, documents show. Ten civil subpoenas. In Delaware Chancery Court for the past two days.

Morgan Stanley declined to comment. Brookfield did not immediately respond to a request for comment. Representatives for Musk and Twitter could not be reached.

The subpoena seeks documents and communications about transactions, financing, “bots” or any information on fake Twitter accounts. They also sought information on the potential impact the recipient could have on the deal from changes in the shares of electric car maker Tesla Inc (TSLA.O), where Musk is chief executive.

The subpoenas are part of Twitter’s lawsuit against Musk, who sought to get him involved in the deal at the $54.20 a share he agreed to. The five-day trial is scheduled to begin Oct. 17 in Delaware Chancery Court.

Experts say the subpoena shows Twitter wants to know what lenders, investors and advisers think about Musk’s behavior after the deal was signed in late April.

“They suspect he’s behind the scenes of conspiring to blow up the whole thing,” said Minor Myers, a professor at the University of Connecticut School of Law.

Musk said on July 8 that he was pulling out of the deal because Twitter allegedly violated the agreement by withholding data about fake accounts on the platform. Twitter has said the fake accounts distracted from the only important issue, the terms of the agreement. Musk also said he was leaving because Twitter fired senior executives and a third of its talent acquisition team, in violation of Twitter’s obligation to “basically keep the material components of its current business organization intact.”read more

Legal experts say Musk can’t be ordered to close the deal if the financing fails — as long as he’s not the reason for the failure.

Twitter’s subpoena centers on what they say is the firing of Bob Swan, an operating partner at venture capital firm Andreessen Horowitz, who initially led Musk’s efforts to close the deal’s financing. He was replaced by Musk’s longtime partner, Antonio Gracias, according to Twitter’s lawsuit.

Brian Quinn, a professor at Boston College Law School, said Twitter appeared to be wondering “whether Gracias played a role in closing the financing, or if he should slow down.”

Swan did not immediately respond to messages sent via LinkedIn and Andreeesen Horowitz. Gracias did not respond to a request for comment sent to his firm, Valor Equity Partners.

Experts said Twitter would be interested in learning about lenders’ concerns about the number of fake accounts on the platform and whether it was a problem for them, as Musk said.

Investors were asked to communicate about the Twitter deal with people close to Musk, such as Steve Jurvetson, a former Tesla board member and current director of SpaceX, a company founded and owned by Musk. Leading private rocket company.

Jurvetson did not immediately respond to a request for comment sent to his Future Ventures firm.

Joe Lonsdale, co-founder of Palantir Technologies Inc (PLTR.N), wrote on Twitter: “Haha, TWTR lawyers are sending subpoenas to friends in the ecosystem around @elonmusk.” He wrote: “Except some biting comments Also, I have nothing to do with this, but received a document notice ‘You are hereby ordered’.”

He called Twitter’s subpoena a “huge harassment fishing expedition.”

Lonsdale did not immediately respond to a request for comment from 8VC, which was sent to him.

Delaware corporate litigator Theodore Kittila said Twitter was trying to determine what Musk said privately while publicly tweeting about his concerns about bots and fake accounts on Twitter.

“They’re trying to climb out there, behind the tweets,” Kittila said. “They’re looking at emails and trying to speculate on what conversation actually took place and what prompted his decision to suspend trading.”

In the past two days, Musk has issued his own subpoenas to data analytics firm Concentrix Solutions Corp (CNXC.O) and TaskUs USA (TASK.O), which reviews content. Musk’s subpoena issues were filed under seal.

Reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler

Our standard: Thomson Reuters fiduciary principles.