Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Twitter queries banks on Musk's attempts to undermine $44 billion deal

Stock Markets Aug 02, 2022 08:17PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Elon Musk's Twitter profile is seen on a smartphone placed on printed Twitter logos in this picture illustration taken April 28, 2022. REUTERS/Dado Ruvic/Illustration

By Tom Hals

WILMINGTON, Del. (Reuters) - Twitter Inc (NYSE:TWTR) is attempting to find evidence that Elon Musk tried to torpedo the financing of his $44 billion takeover deal for the social media company while also looking into his motivation for backing out of the deal, legal experts said.

Twitter sent dozens of civil subpoenas this week to global banks such as units of Morgan Stanley (NYSE:MS), co-investors in the deal including an affiliate of Brookfield Asset Management Inc, and Musk advisers, according to filings over the past two days in the Delaware Court of Chancery.

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 subpoenas seek documents and communications concerning the deal, its financing, any information on "bot," or fake, Twitter accounts. They also seek information that the recipients may have about potential impact on the deal from changes in the stock price of electric car maker Tesla (NASDAQ:TSLA) Inc, of which Musk is chief executive.

The subpoenas are part of Twitter's lawsuit against Musk seeking to hold him to the deal at the $54.20 per share price he had agreed to. A five-day trial is scheduled to begin Oct. 17 in the Delaware Chancery Court.

Experts said the subpoenas indicate Twitter wants to know what lenders, investors and advisers were saying to each other about Musk's behavior after he signed the deal in late April.

"They suspect that behind the scenes he's been conspiring to blow the whole thing up," said Minor Myers, a professor at UConn School of Law.

Musk said on July 8 he was backing out of the deal because Twitter allegedly breached the agreement by withholding data about fake accounts on the platform. Twitter has said the fake accounts are a distraction from the only issue that matters, which is the terms of the agreement. Musk had also said he was walking away because Twitter fired high-ranking executives and one-third of the talent acquisition team, breaching Twitter's obligation to "preserve substantially intact the material components of its current business organization."

Musk cannot be ordered to close the deal if financing fails -- provided he's not the cause of the failed funding, according to legal experts.

Twitter's subpoenas focused on what they said was the firing of Bob Swan, an operating partner at venture capital firm Andreessen Horowitz, who initially led Musk's efforts to finalize deal finance. He was replaced by Antonio Gracias, a long-time Musk associate, according to Twitter's lawsuit.

Brian Quinn, a professor at Boston College Law School, said Twitter seems to want to know if "Gracias had any role in getting financing done or if he was just supposed to slow things down."

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

Experts said Twitter will be interested in understanding lenders' concerns about the number of fake accounts on the platform, and whether it was an issue for them as Musk has suggested.

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

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

"lol, lawyers w/ TWTR are sending subpoenas to friends in the ecosystem around @elonmusk," wrote Joe Lonsdale, a co-founder of Palantir Technologies (NYSE:PLTR) Inc, on Twitter. "I have nothing to do with this aside from a few snarky comments, but got a 'YOU ARE HEREBY COMMANDED' document notice," he wrote.

He called Twitter's subpoenas a "giant harassing fishing expedition."

Lonsdale did not immediately respond to a request for comment sent to his 8VC firm.

Theodore Kittila, a Delaware corporate litigator, said Twitter is trying to determine what Musk was saying privately while publicly sending tweets that he was concerned about bots and fake accounts on Twitter.

"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."

Musk has sent his own subpoenas over the past two days to Concentrix Solutions Corp, a data analytics firm, and TaskUs USA, which moderates content. Musk's subpoena questions were filed under seal.

Twitter queries banks on Musk's attempts to undermine $44 billion deal

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email