LONDON (Bywire News) - The saga of Elon Musk’s takeover of Twitter looks set to run and run as legal experts from Twitter attempt to probe the reason for his backing out – as well as suggestions he is trying to torpedo the financing of his $4bn takeover.
According to the filing in the Delaware Court of Chancery, Twitter had sent out dozens of civil subpoenas to a number of global banks such as Morgan Stanley, Musk advisers and co-investors including an affiliate of Brookfield Asset Management Inc.
Morgan Stanley declined to comment, and Brookfield did not respond to a request for comment with representatives for Musk and Twitter not being reached.
The subpoenas seek documents and communications that regard the deal, its financing and any information on bots or fake accounts. They seek to identify information the recipients may have regarding whether or not changes in the Tesla stock price may have impacted the deal.
The subpoenas are part of Twitter’s lawsuit against Musk as they seek to hold him at the $54.20 per share price they had initially agreed to. A five-day trial is scheduled to start on October 17th in the Delaware Court of Chancery.
Experts claim that the subpoenas are an indication that Twitter wants information on what lenders, investors and advisers were saying to each other about Musk’s behaviour after the deal was signed in late April.
Minor Myers, a professor at UConn School of Law said: "They suspect that behind the scenes he's been conspiring to blow the whole thing up."
On July 8th Musk said that he would be backing out of the deal because Twitter had breached the agreement by not fully disclosing data about fake accounts on their platform. According to Twitter, fake accounts are just a diversion tactic from the real issue at hand which is the terms of the agreement already in place.
Musk also added that he was moving away from the deal because Twitter fired high-ranking executives and one-third of the talent acquisition team which would breach Twitter’s obligation to "preserve substantially intact the material components of its current business organization."
Legal experts also claim that Musk cannot be ordered to close the deal if financing fails as long as he isn’t the cause of the failed funding.
Twitter’s subpoenas focused on what they claimed to be the firing of Bob Swan, an operating partner at venture capital firm Andreessen Horowitz, who led Musk’s efforts to finalize deal finance. According to Twitter’s lawsuit, he was replaced by a long-time Musk associate, Antonio Gracias.
Brian Quinn, a professor at Boston College Law School, said Twitter are interested in knowing if "Gracias had any role in getting financing done or if he was just supposed to slow things down."
Swan didn’t respond to messages sent through LinkedIn and to Andreessen Horowitz. Gracias also didn’t respond to a request for comment sent to Valor Equity Partners firm.
Experts claim that Twitter will be interested in understanding lenders concerns regarding the number of bots and if it really was an issue for them as Musk suggested.
Investors were also asked for communications regarding the Twitter deal from those close to Musk including a former Tesla board member and current director of SpaceX, Steve Jurvetson.
Jurvetson didn’t respond to a request for comment sent to Future Ventures firm.
Joe Lonsdale, a co-founder of Palantir Technologies Inc wrote "lol, lawyers w/ TWTR are sending subpoenas to friends in the ecosystem around @elonmusk," while adding "I have nothing to do with this aside from a few snarky comments, but got a 'YOU ARE HEREBY COMMANDED' document notice."
He called Twitter’s subpoenas a "giant harassing fishing expedition."
Lonsdale also did not respond to a request for comment sent to his 8VC firm.
A Delaware corporate litigator, Theodore Kittila, said Twitter is attempting to determine what Musk was saying privately while publicly claiming the bots and fake accounts were his main cause for concern.
"They are trying to climb in there, behind the tweets," said Kittila. "They are looking at emails and trying to divine the conversation that actually occurred and what drove his decision to suspend the deal."
Over the past two days, Musk has sent his own subpoenas to Concentrix Solutions Corp which is a data analytics firm as well as TaskUs USA which moderates content. However, Musk’s subpoena questions were filed under seal.
(Writing by Samba Jallow, editing by Klaudia Fior and Tom Cropper)