Twitter v. Musk: Searching for evidence of a scuttled deal

  • Bob Swan
Date:3 August 2022

According to legal experts, Twitter is seeking for evidence that Elon Musk tried to torpedo the funding of his US$44 billion acquisition proposal for the social media business. It is also investigating the reasons for his decision to back out of the transaction.

According to documents filed over the past two days in the Delaware court of chancery, Twitter served dozens of civil subpoenas this week on international banks like affiliates of Morgan Stanley, co-investors in the deal like affiliates of Brookfield Asset Management, and Musk advisers.

Morgan Stanley chose not to respond. An inquiry for comment was not immediately answered by Brookfield. No one could be reached to speak with Musk or Twitter representatives.

The subpoenas ask for emails and records related to the transaction, its funding, and any details on “bot,” or false, Twitter accounts. Additionally, they ask the receivers if they have any knowledge of how fluctuations in the stock price of Musk’s electric vehicle manufacturer Tesla may affect the deal.

The subpoenas are a part of Twitter’s lawsuit against Musk, which aims to compel him to honor the agreement at the $54.20 per share price. On October 17, a five-day trial is set to start in the Delaware chancery court, according to techcentral.co.za.

According to experts, the subpoenas show Twitter is interested in learning what lenders, investors, and advisers were saying about Musk’s actions after he signed the agreement in late April. According to Minor Myers, a professor at the UConn School of Law, “they feel that he has been conspiring to blow the whole thing up behind the scenes.”

On July 8, Musk announced that he was canceling the agreement because Twitter allegedly broke the terms by withholding information regarding phony accounts on the network. According to Twitter, the phony accounts serve as a diversion from the agreement’s conditions, which are the only thing that really matters. Additionally, Musk had stated that he was leaving because of Twitter’s failure to “preserve largely intact the material components of its current business organization” by firing high-ranking executives and one-third of the talent acquisition team.

Bob Swan

Legal experts argue that Musk cannot be forced to complete the transaction if financing fails, providing he is not the reason for the unsuccessful finance.

Bob Swan

The focus of Twitter’s subpoenas was on Bob Swan, an operational partner at the venture capital firm Andreessen Horowitz who first oversaw Musk’s efforts to secure deal financing. Twitter’s lawsuit claims that Antonio Gracias, a longtime associate of Elon Musk, took his place.

Boston College Law School’s Brian Quinn remarked that Twitter appears to be asking whether “Gracias had any involvement in getting funding done or whether he was merely instructed to keep things down.”

Andreeesen Horowitz and LinkedIn communications to Swan did not receive a prompt response. An inquiry for comment made to Gracias’ company, Valor Equity Partners, received no response.

According to experts, Twitter would be curious to learn about lenders’ worries about the prevalence of bogus accounts on the network and whether or not this was a problem for them as Musk has stated.

Investors were asked to provide contacts between close friends of Musk, like Steve Jurvetson, a former Tesla board member and current director of SpaceX, the privately owned rocket firm that Musk founded and currently heads, and those regarding the Twitter acquisition.

An inquiry for comment made to Jurvetson’s Future Ventures company did not receive an immediate response.

Joe Lonsdale, a co-founder of Palantir Technologies, tweeted, “funny, lawyers w/ TWTR are mailing subpoenas to people in the ecosystem around @elonmusk.” I have nothing to do with this other than to make a few snide remarks, but I received a paper notification that read, “YOU ARE HEREBY COMMANDED,” he stated. He described the subpoenas sent to Twitter as a “giant annoying fishing expedition.” A message seeking response was sent to Lonsdale’s 8VC company, but he did not react right away.

According to Delaware business litigator Theodore Kittila, Twitter is attempting to ascertain what Musk was saying in private while publicly tweeting his worry about Twitter bots and false accounts.

Behind the tweets, they’re attempting to get in, said Kittila. They are examining emails to try to understand what exactly happened during the conversation and what led to the suspension of the deal.

Over the past two days, Musk has sent his own subpoenas to the content moderator TaskUs USA and the data analytics company Concentrix Solutions. The subpoena questions for Musk were submitted under seal.

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