Twitter inquires banks about Musk’s attempts to undermine a $44 billion deal

Elon Musk’s Twitter profile is seen on a smartphone placed on the Twitter logos printed in this illustration taken on April 28, 2022. REUTERS/Dado Ruvic/Illustration

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WILmington, Dell, Aug. 2 (Reuters) – Twitter Inc. (TWTR.N) Legal experts said Elon Musk is trying to find evidence that Elon Musk tried to torpedo financing for a $44 billion acquisition of the social media company while also looking into his motives for backing out.

Twitter has sent dozens of civil subpoenas this week to global banks such as Morgan Stanley units (MS.N)Investors involved in the transaction including a subsidiary of Brookfield Asset Management Inc (BAMa.TO)and Musk’s advisors, according to what has been reported over the past two days in Delaware court.

Morgan Stanley declined to comment. Brookfield did not immediately respond to a request for comment. Musk and Twitter representatives could not be reached.

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The subpoenas request documents and correspondence relating to the deal, its financing, and any information about fake bot or Twitter accounts. They are also looking for information that recipients may have about the potential impact on the transaction from changes in the share price of electric car maker Tesla Inc. (TSLA.O)of which Musk is the CEO.

The subpoenas are part of Twitter’s lawsuit against Musk, which is seeking to compel him to do the deal at $54.20 per share he agreed to. A five-day trial is scheduled to begin October 17 in Delaware Chancery Court.

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

“They suspect he was plotting behind the scenes to blow the whole thing up,” said Minor Myers, a professor at UConn Law School.

Musk said on July 8 that he backed out of the deal because Twitter violated the agreement by allegedly withholding data about fake accounts on the platform. Twitter said the fake accounts are distracting from the only important issue, which is the terms of the agreement. Musk had also said he was pulling out because Twitter fired its top executives and a third of its talent acquisition team, violating Twitter’s commitment to “significantly maintain the physical components of its existing business organization.” Read more

Musk cannot be asked to close the deal if the financing fails — provided it is not the cause of the financing failure, according to legal experts.

The subpoenas issued by Twitter focused on what they said was the firing of Bob Swan, operating partner at venture capital firm Andreessen Horowitz, who initially led Musk’s efforts to terminate deal financing. He has been replaced by Antonio Gracias, Musk’s longtime aide, according to the Twitter lawsuit.

Brian Quinn, a professor at Boston College Law School, said Twitter seemed to want to know if “Gracias had any role in getting funding or if it was supposed to slow things down.”

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

Experts said Twitter would be interested in understanding lenders’ concerns about the number of fake accounts on the platform, and whether it is a problem for them as Musk suggested.

Investors have been asked to reach out 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 Musk founded and led.

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

Joe Lonsdale, co-founder of Palantir Technologies Inc (PLTR.N), on Twitter. He wrote: “I have nothing to do with this except for a few scathing comments, but I did get a notice on the ‘You ordered here’ document.

He described the Twitter subpoenas as a “giant harasser hunting expedition.”

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

Theodore Kittila, a Delaware attorney, said Twitter is trying to determine what Musk said in private while sending out public tweets that he was concerned about bots and fake Twitter accounts.

They’re trying to get up there, behind the tweets,” Kitila said. “They look at the emails and try to speculate on what conversation really took place and what prompted his decision to put the deal on hold.”

Musk has sent his private notes over the past two days to Concentrix Solutions Corp (CNXC.O)a data analytics company, and TaskUs USA (TASK.O), who oversees the content. Mask’s summoning questions have been submitted under seal.

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Additional reporting by Tom Hales in Wilmington, Delaware. Editing by Leslie Adler

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