Elon Musk Files Sealed Countersuit Against Twitter Over $44 Billion Deal

WILMINGTON, Delaware, July 29 (Reuters) – Elon Musk has hit back at Twitter Inc. (TWTR.N) Friday, stepping up its legal fight against the social media company over its attempt to walk away from the $44 billion purchase, though the lawsuit was filed confidentially.

While the 164-page document was not available to the public, 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 whether Musk can walk away from the deal.

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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 he breached his fiduciary duty to Twitter shareholders, and award damages. -interest for the losses he has caused.

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

Musk, the richest person in the world and CEO of Tesla Inc. (TSLA.O)said on July 8 that it was giving up the takeover and blamed Twitter Inc for breaching the agreement by misrepresenting the number of fake accounts on its platform. Read more

Twitter sued a few days later, calling the fake account a distraction and saying 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 scrapped the deal. Read more

McCormick rushed the case to trial last week, saying she wanted to limit potential harm to Twitter from the uncertainty of the deal.

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

The two sides had essentially agreed to a trial on Oct. 17, but disagreed over the limits of discovery or access to internal documents and other evidence.

Musk accused Twitter this week of dragging its feet on its discovery requests, and Twitter accused it of seeking massive amounts of data unrelated to the main issue of the case: whether Musk breached sale.

The Chief Justice in her order on Friday appeared to anticipate the discovery disputes to come.

“This order does not resolve any specific discovery disputes, including ownership of any large dataset requests,” McCormick said.

Musk also faces a week-long trial in Wilmington, Delaware, starting Oct. 24. A Tesla shareholder is seeking to overturn the electric vehicle maker’s CEO’s record $56 billion salary as waste and unfair enrichment.

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Reporting by Tom Hals in Wilmington, Del. Editing by Noeleen Walder, Chizu Nomiyama and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Tom Hall

Thomson Reuters

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

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