Elon Musk is reportedly considering countersuing Twitter to get rid of the deal to buy the social network.
A report by The New York Post revealed that the countersuit would be aimed at Musk’s legal team gaining more time to collect information about bots on Twitter, the main reason he gave for canceling the deal.
Twitter sued Musk in an attempt to force him to complete its $44 billion acquisition, accusing him of “outlandish” and “bad faith” actions that hit the platform with irreparable damage and “wreak havoc” on its stock price.
Musk pledged in April to pay $54.20 per share, and Twitter agreed to those terms, but now both sides are gearing up for a legal battle since the tycoon said he was pulling out, accusing the social network of lying about the number of fake accounts.
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Elon Musk wants to buy time
In a filing with the Delaware court, Musk’s lawyers also accused Twitter of creating delays, giving evasive answers, and putting up technical hurdles. They also challenged Twitter’s request for an expedited trial, claiming it would take months to obtain information and depose numerous witnesses on the issue of fake accounts.
The filing repeated other allegations Musk had previously made, including the claim that Twitter violated the acquisition agreement when it fired two senior managers without first informing Musk.
Musk has twenty days to file his counterclaims. Twitter’s legal team wants a four-day trial starting in September, while Musk is pushing for a later court date.
Delaware Court of Chancery Chancellor, Kathaleen McCormick, is expected to weigh in on Twitter’s request for an expedited trial. McCormick would also hear Musk’s counterclaim if filed by his legal team.
Specialists in this type of legal dispute claim that Twitter will not emerge unscathed because, during the negotiation process, the company laid off employees. It slowed hiring, a practice they consider contrary to the company’s obligation to continue operating normally.
However, Musk could be at a disadvantage because he will need to prove that the platform concealed data about the fake accounts. He will also need to prove that this particular issue called into question the fundamental basis of the agreement.
The original $44 billion merger agreement reached by Twitter with Elon Musk included a clause providing for a $1 billion penalty should either party decides to back out.
The court could release Musk from the obligations agreed to in the deal, force him to go ahead with the agreement and pay the agreed $44 billion, or force him to pay the $1 billion penalty for walking away from the deal. The latter option would be a victory for the tycoon and a coup de grace for the company.