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Elon Musk is rolling out a new strategy aimed at blowing up his $44 billion deal to purchase Twitter.
According to reports, the billionaire is planning to countersue the social media giant after Twitter’s board of directors announced they had hired a legal team to sue Musk last week for trying to back out.
“Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” the company said in the lawsuit. “Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
Musk’s decision to tank the deal came after he and his investment group were unable to obtain more precise information from Twitter about the real number of bot and fake accounts on the platform.
Late Monday, the New York Post reported that Musk’s legal team will ask the Delaware Court of Chancery to grant them more time to obtain additional information regarding bot accounts.
The outlet adds:
Musk has 20 days from last Tuesday, when Twitter’s suit was filed, to file his own counterclaims.
Twitter wants the court to force Musk to purchase Twitter at the agreed-upon price of $54.20 per share, while Musk has argued that he’s allowed to terminate the deal because Twitter has failed to provide adequate information about fake accounts on the site.
The first hearing in Twitter’s suit is scheduled for Tuesday when Delaware Court of Chancery chancellor Kathaleen McCormick is expected to weigh in on Twitter’s request for an expedited trial.
Attorneys for Twitter are pressing for a four-day trial that would begin in September, The Post added, while Musk wants to push a trial date back to no sooner than February 2023.
“The core dispute over false and spam accounts is fundamental to Twitter’s value,” Musk’s lawyers wrote in a filing on Friday in response to Twitter’s suit. “It is also extremely fact and expert intensive, requiring substantial time for discovery.”
Musk’s countersuit would also be heard by McCormick, The Post noted.
According to University of Iowa corporate law and finance law professor Robert T. Miller, who wrote in a Wells Fargo investor note on Monday, the chancellor is “likely to grant” Twitter’s demand for a speedy trial.
It makes sense, then, that Musk would file a countersuit because “if he doesn’t do that, he’s surrendering,” Miller went on to say in an interview with The Post.
Miller, who once worked for Wachtell, Lipton, the law firm retained by Twitter, added that he does not expect a countersuit to go in Musk’s favor if his legal team simply repeats the same claims about bot and spam accounts without presenting any new evidence.
However, if the countersuit makes new arguments then Musk may be able to win at least some additional time and discovery power, Miller noted.
“If he comes up with a completely new issue that has not been raised, it could change things,” Miller said.
“Some legal analysts have predicted that the Court of Chancery won’t order Musk to buy Twitter because the deal is so large and because a refusal to comply by Musk could wreak havoc on corporate courts,” The Post reported, adding: “Miller, however, argues that ‘all the incentives for Delaware cut in favor of making sure that the big guys get treated the same way as everybody else.'”
Miller went on to say that the court could force Musk to buy Twitter and that he could, in turn, simply refuse to sign the deal. If that were to happen, the court could then appoint a “special master” to sign on his behalf, hold Musk in contempt of court, or both.
A contempt charge could result in an arrest and jail time for Musk, The Post added, citing Miller.