Wilmington: Tesla CEO Elon Musk has countersued Twitter on Friday, escalating his legal fight against the social media giant over his bid to walk away from the USD 44 billion purchase deal.
According to a report by news agency Reuters, the lawsuit was filed confidentially. As per the report, though the 164-page document was not publicly available, a redacted version could soon be made public under court rules. Musk's lawsuit was reportedly filed hours after Chancellor Kathaleen McCormick of the Delaware Court of Chancery ordered a five-day trial beginning October 17, later this year, to determine if the billionaire can walk away from the deal. Meanwhile, Musk was sued by a Twitter shareholder on Friday, who asked the court to order the billionaire to close the deal, find that he breached his fiduciary duty to Twitter shareholders and award damages for losses he caused. Musk owes a fiduciary duty to Twitter's shareholders because of his 9.6 per cent stake in the company and because the takeover agreement gives him a veto of many of the company's decisions, Reuters reported citing the lawsuit, which seeks class status. The lawsuit was filed by Luigi Crispo, who owns 5,500 Twitter shares, in the Court of Chancery, said the report.
Twitter Deal Timeline
World's richest person, Musk, on July 8 announced that he was abandoning the takeover deal and blamed Twitter for breaching the agreement by misrepresenting the number of fake accounts on its platform. Days later, Twitter sued Musk calling the fake account claims a distraction. Twitter said Musk was bound by the merger contract to close the deal at USD 54.20 per share. The company's shares suffered since Musk abandoned the deal and Twitter has blamed the court fight for slumping revenue and causing chaos within the company. McCormick fast-tracked the case to trial last week, saying she wanted to limit the potential harm to Twitter caused by the uncertainty of the deal.
The two sides have agreed to an October 17 trial, but were at odds over the limits of discovery, or access to internal documents and other evidence. Musk accused Twitter of dragging its feet in response to his discovery requests, and Twitter accused him of seeking huge amounts of data that are irrelevant to the main issue in the case. The chief judge in her order on Friday appeared to anticipate discovery disputes to come. "This order does not resolve any specific discovery disputes, including the propriety of any requests for large data sets," said McCormick. Musk also faces a week-long trial in Wilmington, Delaware, beginning October 24. A Tesla shareholder is seeking to void as corporate waste and unjust enrichment the CEO's record-breaking USD 56 billion pay package from the electric vehicle maker.