Twitter hires Wachtell legal firm to sue Elon Musk for ending $44bn acquisition
Twitter has hired elite law firm Wachtell, Lipton, Rosen & Katz as it readies for a legal battle against Elon Musk, who has moved to terminate his $44bn acquisition of the social media company, according to two people familiar with the situation.
The San Francisco company is preparing to file its lawsuit with the Delaware Court of Chancery against Musk early this week, one of the people said.
Musk said on Friday that he planned to walk away from his deal to buy Twitter, citing three breaches of the merger agreement by the social media platform.
In response, Twitter vowed to hold the mercurial billionaire to his original deal terms and price of $54.41 per share, in what could develop into a messy legal fight that would dictate the future of the company.
In addition to drafting merger agreements, Wachtell Lipton has perhaps the leading litigation practice in Delaware, where the majority of US public companies are incorporated. It defends companies in breach of fiduciary duty lawsuits and broken merger agreements in the state.
Both Twitter and Musk will also probably hire local counsel in Delaware to work alongside the lawyers whom they retain from other states.
The firm had initially defended Musk in a shareholder lawsuit brought in Delaware by Tesla shareholders who alleged that Musk had improperly bailed out SolarCity, another piece of the Musk empire, when Tesla acquired the clean energy company in 2017.
Earlier this year, Musk was cleared by a Delaware judge of any wrongdoing in that case. He was represented by the law firm Cravath, Swaine & Moore in the 2021 trial.
In a regulatory filing on Friday, Musk’s team argued that Twitter had failed to provide enough information to prove that the number of fake and spam accounts on its platform stands at less than 5 per cent, as it has long estimated.
The filing alleged that the true number may in fact be “wildly higher”, suggesting the company had made false statements in its regulatory filings. It also accused Twitter of failing to comply with its obligation to “conduct its business in the ordinary course”, by firing several senior employees after the agreement had been made.
Twitter, which denies Musk’s claims, has an incentive to push the deal through or extract a larger break-fee from Musk than the $1bn already agreed. Its share price has declined by more than 30 per cent since the Tesla chief made his offer and no other buyers have emerged.
The company is likely to argue that Musk’s concerns simply mask buyer’s remorse over a pricey and highly leveraged deal, amid a broader rout in tech stocks.
Twitter declined to comment on Wachtell’s appointment, which was first reported by Bloomberg. Wachtell did not immediately respond to a request for comment.
Additional reporting by Alexandra Scaggs in New York
Quoted from Various Sources
Published for: Ipodifier