Twitter has hired an elite law firm to handle its forthcoming lawsuit against Elon Musk, which could be filed any day now.
After Musk pulled out of his deal to buy Twitter for $44 billion on Friday, Twitter Board Chairman Bret Taylor said the company will sue Musk to enforce the merger contract and force him to complete “the transaction on the price and terms agreed upon.” Twitter then hired the “merger law heavyweight” Wachtell, Lipton, Rosen & Katz to work on a lawsuit it expects to file early this week in the Delaware Court of Chancery, Bloomberg reported.
“Wachtell Lipton has perhaps the leading litigation practice in Delaware, where the majority of US public companies are incorporated,” the Financial Times wrote. “It defends companies in lawsuits over breach of fiduciary duty and broken merger agreements in the state.”
The Wachtell firm gives Twitter “access to lawyers including Bill Savitt and Leo Strine, who served as Chancellor of the Delaware Chancery Court,” Bloomberg wrote. Wachtell has previously represented Musk and Tesla in other matters.
To defend against Twitter’s lawsuit, Musk has hired Quinn Emanuel Urquhart & Sullivan. “The firm led his successful defense against a defamation claim in 2019 and is representing him as part of an ongoing shareholder lawsuit over his failed attempt to take Tesla private in 2018,” Bloomberg wrote.
Merger contract could force Musk to close deal
Twitter’s stock continued its decline, with a drop of over 8 percent in today’s trading so far. The stock price was less than $34 as of this writing, while Musk agreed to buy the company for $54.20 per share.
The Twitter/Musk deal includes a $1 billion breakup fee that applies in some circumstances, but Twitter can try for more than that. As we’ve written, the merger deal says that if Twitter meets its obligations under the agreement, it “shall be entitled to specific performance or other equitable remedy” to “cause the Equity Investor [Musk] to fund the Equity Financing, or to enforce the Equity Investor’s obligation to fund the Equity Financing directly, and to consummate the Closing.”
Musk claimed that Twitter violated the merger agreement in his Friday letter informing the company that he is terminating the deal. Musk’s claims center on his attempts to get more information on Twitter’s spam estimates, with the letter saying:
While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consumption of the transaction,” Twitter has not complied with its contractual obligations. For nearly two months, Mr. Musk has sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform”… This information is fundamental to Twitter’s business and financial performance and is necessary to consummate the transactions contemplated by the Merger Agreement because it is needed to ensure Twitter’s satisfaction of the conditions to closing, to facilitate Mr. Musk’s financing and financial planning for the transaction, and to engage in transition planning for the business. Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr Musk incomplete or unusable information.