HomeBusinessTwitter hires US law firm Wachtell to sue Musk for ending $44...

Twitter hires US law firm Wachtell to sue Musk for ending $44 billion takeover

Twitter has hired elite law firm Wachtell, Lipton, Rosen & Katz as it prepares for a legal battle against Elon Musk, who has decided to end his $ 44 billion acquisition of the company. social media, according to two people familiar with the situation.

The San Francisco company is preparing to file its lawsuit in the Delaware Court of Chancery against Musk early this week, one of the people said.

Musk said on Friday he planned to walk away from his deal to buy Twitter, citing three breaches of the merger agreement by the social media platform.

In response, Twitter pledged to keep the mercurial billionaire on its original terms and price of $54.20 per share, in what could turn into a messy legal battle that would dictate the company’s future.*

Wachtell Lipton has perhaps the largest litigation practice in Delaware, where the majority of US public companies are incorporated. He defends companies in lawsuits for breach of fiduciary duty and breach of merger agreements in the state.

The company originally defended Musk in a shareholder lawsuit in Delaware by Tesla shareholders who alleged Musk improperly bailed out SolarCity, another part of Musk’s empire, when Tesla acquired the clean energy company in 2017.

Earlier this year, Musk was cleared by a Delaware judge of any wrongdoing in the case. He was represented by law firm Cravath, Swaine & Moore in the 2021 trial.

Twitter declined to comment on Wachtell’s nomination, which was first reported by Bloomberg. Wachtell did not immediately respond to a request for comment.

In a regulatory filing on Friday, Musk’s team argued that Twitter failed to provide enough information to prove that the number of fake accounts and spam on its platform was less than 5%, as it said. has long felt.

The filing alleged that the actual number may in fact be “very high”, suggesting that the company had made misrepresentations in its regulatory filings. He also blamed Twitter for failing to meet its obligation to “conduct business in the ordinary course” by firing several senior executives after the deal was struck.

Twitter, which denies Musk’s claims, has an incentive to push through the deal or extract more severance pay from Musk than the already agreed billion dollars. Its stock price has fallen more than 30% since the Tesla chief made his offer and no other buyers have emerged.

It comes as the company has been plunged into crisis, announcing mass layoffs and cost-cutting measures in recent weeks. Among the remaining employees, morale is low due to job and divisive uncertainty over whether Musk, who has promised to bring a “free speech” ethos to the platform, should direct it.

Twitter is likely to argue that Musk’s concerns are simply masking buyer’s remorse over an expensive, high-leverage deal amid a broader tech stock rout.

This is an interpretation shared by many analysts and jurists.

“We see Elon Musk’s unsubstantiated claims that [Twitter] misleads investors about [percentage] fake accounts as an excuse to pull out of the deal,” Jefferies equity analyst Brent Thill wrote in a research note on Sunday.

Twitter has long since released its 5% figure, “making us question the validity of Musk’s concerns,” he added.

Eric Talley, a Columbia law professor, said Musk’s arguments were “particularly flimsy” given Twitter’s disclosures of fake accounts indicate they are estimates.

He added that while a covenant in the merger agreement states that Twitter must comply with requests for information within reason, the company will be able to argue that sharing vast amounts of private user data n is not admissible.

“[The requests] just aren’t going to succeed,” he said.

“It could well be partly a negotiation strategy to try to threaten. . . that it’s going to be such a torturous process in litigation that they might as well accept either a settlement or a reduced price to move forward.

Additional reporting by Alexandra Scaggs in New York

*This story has been edited to correct the agreed sale price

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