Elon Musk plans to file a counter-lawsuit against Twitter in the coming days — the tech billionaire’s latest attempt to scrap his $44 billion agreement to buy the social-networking giant, a source close to the case told The Post.
The purpose of the countersuit would be to push a Delaware Court of Chancery judge to grant Musk’s Lawyers more time and power to gather information about bots on Twitter, sources close to the situation said. A protracted legal battle could also potentially drag down the company’s stock, giving Musk more leverage to renegotiate Twitter’s sale price.
The news comes less than a week after Twitter sued Musk in Delaware, accusing the mogul of agreeing to buy the site then attempting to “trash the company, Disrupt its operations, Destroy stockholder value, and walk away.”
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.
Twitter’s lawyers are pushing for a four-day trial starting in September, while Musk wants the trial to open no earlier 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 Chancellor is “likely to grant” Twitter’s request for a quick trial, University Of Iowa law corporate and finance law Professor Robert T. Miller said in a Monday Wells Fargo Investor note obtained by The Post.
Musk then filing a countersuit would make sense because “if he doesn’t do that, he’s surrendering,” 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 countersuit to turn the tide in Musk’s favor if he reiterates the same claims about Twitter bots without new evidence. But if Musk embraces new arguments, he could potentially win additional time or Discovery power, Miller said.
“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. 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.”
If the court ultimately rules that Musk must buy Twitter, Miller said the mogul may physically refuse to sign the paperwork to close the acquisition.
In that case, Delaware has the power to appoint an official called a “special master” to act on his behalf, according to Miller. The court could also hold Musk in contempt, potentially leading to fines or even jail time.
Ahead of Tuesday’s 90-minute hearing, Chancellor McCormick announced she had tested positive for COVID-19 and would be presiding through Zoom.
Musk, for his part, was spotted on Sunday drinking a cocktail and swimming on a yacht in Mykonos with Ari Emanuel, according to exclusive photos obtained by Page Six.
Wells Fargo has a $54.20 price target for Twitter shares, indicating the bank’s analysts believe Twitter will win and the deal will go through at its 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 Court’s power/inclination
to enforce [force the deal to close]as well as its broad enforcement powers,” Wells Fargo analysts wrote in Monday’s note.