Elon Musk files countersuit against Twitter over $44bn takeover deal

A judge at the Delaware Court ordered a five-day trial in October to determine if the billionaire can walk away from the transaction

Elon Musk was sued on Friday by a Twitter shareholder who asked the court to order the billionaire to close the deal, find that he breached his fiduciary duty to Twitter shareholders and award damages for losses he caused. Reuters
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Elon Musk countersued Twitter on Friday, escalating his legal fight against the social media company over his attempt to walk away from the $44 billion purchase, although the lawsuit was filed confidentially.

While the 164-page document was not publicly available, under court rules a redacted version could soon be made public.

Mr Musk's lawsuit was filed hours after Chancellor Kathaleen McCormick of the Delaware Court of Chancery ordered a five-day trial beginning on October 17 to determine if the billionaire can abandon the deal.

Also on Friday, Mr Musk was sued by a Twitter shareholder who asked the court to order the billionaire to close the deal, find that he breached his fiduciary duty to Twitter shareholders and award damages for losses he caused.

Mr Musk owes a fiduciary duty to Twitter's shareholders because of his 9.6 per cent stake in the company and because the takeover agreement gives him a veto of many of the company's decisions, according to the lawsuit, which seeks class status.

The lawsuit was filed by Luigi Crispo, who owns 5,500 Twitter shares, in the Court of Chancery.

Mr Musk, the world's richest person and chief executive of Tesla, said on July 8 he was abandoning the takeover and blamed Twitter for breaching the agreement by misrepresenting the number of fake accounts on its platform.

Twitter sued days later, calling the fake account claims a distraction and saying Mr Musk was bound by the merger contract to close the deal at $54.2 a share.

The company's shares ended on Friday at $41.61, the highest close since Mr Musk abandoned the deal.

Ms McCormick fast-tracked the case to trial last week, saying she wanted to limit the potential harm to Twitter caused by the uncertainty of the deal.

Twitter has blamed the court fight for slumping revenue and causing chaos within the company.

The two sides had basically agreed to an October 17 trial, but were at odds over the limits of discovery, or access to internal documents and other evidence.

Mr Musk accused Twitter this week of dragging its feet in response to his discovery requests, and Twitter accused him of seeking huge amounts of data that are irrelevant to the main issue in the case: whether Mr Musk had violated the deal contract.

The chief judge in her order on Friday appeared to anticipate discovery disputes to come.

Twitter has blamed the court fight for slumping revenue and causing chaos within the company. AFP

"This order does not resolve any specific discovery disputes, including the propriety of any requests for large data sets," Ms McCormick said.

Mr Musk also faces a week-long trial in Wilmington, Delaware, beginning on October 24.

A Tesla shareholder is seeking to void as corporate waste and unjust enrichment the chief executive's record-breaking $56bn pay package from the electric vehicle maker.

Updated: July 30, 2022, 4:57 AM
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