Twitter is requesting documents from several investors in the circle of associates, friends and financial supporters of Elon Musk, as part of its preparation for a lawsuit against the CEO of Tesla following his withdrawal from the purchase of the company for $44 billion, which he agreed to about three months ago.
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Twitter wants any correspondence from these people regarding the deal. The goal is likely to determine whether Musk had other concerns about completing his deal to buy the company than those he has discussed publicly, lawyers and academics not involved in the lawsuit said.
It is customary during such disputes for a merger to request information from financial institutions that support the delayed transaction. But lawyers and academics say that because Musk bought the company as a private individual, those close to him, including friends and advisers, are a fair target as possible sources of information about his intentions.
“A single email can be decisive and increase the chances of winning,” said Stephen Gillers, a professor at New York University School of Law.
The subpoenas included requests for information and documents, including face-to-face conversations, physical mail, e-mail, text messages, instant messages, social media contacts, faxes and phone calls, according to court documents.
“A huge and disturbing fishing trip”
Among those who received notices were venture capital investor Steve Jorbetson, an early investor in Tesla who once sat on the company’s board of directors; and Marc Andreessen, whose venture capital firm Andreessen Horowitz said it is allocating $800 million to invest in a Musk takeover. Entrepreneur David Sacks mentioned the subpoena he received on Twitter, and uploaded an image of a triangular finger alongside the tweet. Sachs is one of a tight-knit group of activists and businesspeople who encouraged Musk to get involved on Twitter, people familiar with the matter said.
Sachs declined to respond to the subpoena. Jorbetson and Andreessen did not respond to a request for comment.
Venture capital investor Joe Lonsdale also mentioned the subpoena he received on Twitter and defined the effort as a “huge and disturbing fishing trip.” Lonsdale said he had nothing to do with the situation between Musk and Twitter, “except for a few snarky comments.” He did not respond to a request for comment.
Twitter claims in the lawsuit that Musk violated the merger agreement by using classified information, and criticized the company for not making efforts to realize the deal. Twitter’s lawyers are expected to point to tweets that Musk uploaded to the network and leverage information and correspondence from the process of sending the subpoenas itself, legal experts said.
“They’re trying to fish out everything they can to refute his claims through anything he may have said to friends, colleagues and investors,” said Charles Elson, a professor of corporate governance at the University of Delaware.
Twitter refused to comment on the subpoenas or the legal strategy. The trial, which will last five days, is set for October 17 in a court in Delaware.
The issue of fake accounts
Musk expressed concerns about the way Twitter counts the amount of fake and bot accounts as the main reason he wanted to back out of the purchase. He said Twitter did not provide him with information he requested and needed to assess how common such profiles are on the platform, and raised questions about the methods Twitter uses to count users.
On Twitter they wrote in official documents that they gave Musk all the information he requested. The company has estimated for many years that less than 5% of its daily users that can be made money from (sending them advertisements) are fake accounts. Musk says the number is much higher and closer to 20%.
Musk’s lawyers did not respond to requests for comment on the subpoenas or their legal strategy. Musk formally responded to the lawsuit last week and included counterclaims, but not all of the details have been released yet because they are confidential while Twitter goes through them to make sure they don’t reveal sensitive information.
Twitter sent subpoenas to at least a dozen banks, including Deutsche Bank, requesting information about the assets and financing of the debt and correspondence related to the deal. A spokesman for the bank did not respond to a request for comment.
Banks and investors are often asked to produce documents about such deals, but the inner circle more broadly is atypical, said Brian Quinn, who teaches mergers and acquisitions at Boston College Law School.
Legal documents that Twitter is requesting include, among other things, all documents and correspondence related to fake or spam accounts – the accounts that Musk defined as bots. “They will ask for details about what roles the bots played. Is that just something to hang on to?” Kevin asked. “What they suspect is that Musk got cold feet.”
Observers of the company are looking for correspondence to support their claim that Musk withdrew because he lost more than $100 billion of his fortune in the market declines. Musk subjugated an amount of approximately 33 billion dollars of his personal capital in favor of the purchase.
It is also possible that Twitter, with the help of all the subpoenas it has sent, is trying to retrace Musk’s steps from the moment he agreed to the purchase, to demonstrate that he did not make a sufficient effort to complete it, said William Newman, a senior consultant at a New York law firm.
The bluebird social network has lost billions in market value since Musk announced his decision to buy the company on April 25 of this year. stock Twitter They closed Tuesday at a value of $40.98, a discount of $24 from the purchase offer from Musk, who agreed to pay $54.20 per share.
Barber Gene and Heather Somerville participated in the preparation of the article