Elon Musk plans to file a countersuit against Twitter in the coming days – the tech billionaire’s latest attempt to terminate its $44 billion agreement to buy the social networking giant, a source close to the case has said , opposite The Post.
The purpose of the countersuit would be to urge a Delaware Court of Chancery judge to grant Musk’s attorneys more time and authority to gather information about bots on Twitter, sources close to the situation said. A protracted legal battle could also potentially drag the company’s stock down, giving Musk more clout to renegotiate Twitter’s sale price.
The news comes less than a week later Twitter has sued Musk in Delawareand accused the mogul of agreeing to buy the site and then trying to “ruin the company, disrupt its operations, destroy shareholder value and walk away.”
Musk has 20 days from last Tuesday, when Twitter filed the lawsuit, to file his own counterclaims.
Twitter wants the court to force Musk into buying Twitter at the agreed price of $54.20 per share while Musk did it argued that he was entitled to cancel the deal because Twitter failed to provide adequate information about fake accounts on the site.
The first hearing in Twitter’s suit is planned for Tuesday, when Delaware Court of Chancery chancellor Kathaleen McCormick is expected to comment on Twitter’s request for an expedited trial.
Twitter’s lawyers are pushing for a four-day trial beginning in September, while Musk wants the trial to begin in February 2023 at the earliest.
“The core dispute over fake and spam accounts is fundamental to the value of Twitter,” Musk’s attorneys wrote in a filing Friday in response to Twitter’s lawsuit. “It’s also extremely factual and expert-heavy and takes a long time to discover.”
Musk’s counterclaim would also be heard by McCormick.
The chancellor “is likely to grant Twitter’s request for a speedy trial,” said Robert T. Miller, a professor of corporate and financial law at the University of Iowa, in a Wells Fargo investor note obtained by the Post Monday.
Musk would then file a countersuit because “if he doesn’t, he surrenders,” Miller added in an interview with The Post.
Miller — who used to work at Wachtell, Lipton, the law firm representing Twitter — doesn’t expect a counterclaim to turn the tide in Musk’s favor if he repeats the same claims about Twitter bots without new evidence. But if Musk picks up new arguments, he could potentially buy additional time or discovery power, Miller said.
“If he comes up with a whole new topic that hasn’t been addressed yet, that 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 big and because a refusal by Musk to comply could wreak havoc in corporate courts. However, Miller argues that “any incentives for Delaware are reduced in favor of ensuring the big boys are treated the same as everyone else”.
If the court ultimately rules Musk must buy Twitter, Miller said the mogul could physically refuse to sign the paperwork completing the acquisition.
In that case, Miller says Delaware has the authority to appoint an officer called a “special master” to act on his behalf. The court could also potentially despise Musk result in fines or even imprisonment.
Ahead of Tuesday’s 90-minute hearing, Chancellor McCormick announced that she had tested positive for COVID-19 and would chair via Zoom.
For his part, Musk was spotted on Sunday having a cocktail and swimming with Ari Emanuel on a yacht in Mykonos, it is said exclusive photos obtained from Page Six.
Wells Fargo has a target price of $54.20 for Twitter stock, indicating the bank’s analysts expect Twitter to win and the deal to close at the original price. Twitter shares closed up 1.8% at $38.41 on Monday, reflecting widespread lingering doubts on Wall Street.
“We believe the market may still be underestimating the power/inclination of the court
it forces [force the deal to close]and its broad enforcement powers,” Wells Fargo analysts wrote in Monday’s statement.