Twitter subpoenas Musk Banks in takeover fight
Twitter has sent dozens of subpoenas in recent days to banks and investors who backed Elon Musk in his bid to acquire the company, while also seeking more information on well-known tech industry figures. considered close to Mr. Musk.
The subpoenas are part of efforts to help determine whether Mr Musk quietly walked away from his deal to acquire Twitter before he even informed him of his intention to do so, which would violate his contract with the company. , said two people familiar with the thinking of Twitter, who requested anonymity because the discussions were private.
Under the terms of the deal, Mr. Musk must make “every reasonable effort” to complete the sale, including securing debt financing for the $44 billion purchase. But Twitter claims in a lawsuit against Mr Musk in the Delaware Chancery Court that he appeared to have abandoned efforts to complete his funding, breaching the agreement.
Mr Musk, who is one of the world’s richest men, has signed letters of commitment with a number of Wall Street banks, led by Morgan Stanley, for a total of $13 billion in funding from loan. He then tapped Silicon Valley investors, including venture capital firm Andreessen Horowitz, to provide around $7 billion in funding.
In subpoenas sent to investment banks working for Mr. Musk, including Morgan Stanley, Barclays and Bank of America, Twitter demanded information related to his efforts to consummate his debt funding, including his expected timeline for the TO DO. Twitter is also requesting information about Mr. Musk’s decision to cancel his loan against his Tesla shares to help fund the deal.
What Happened to Elon Musk’s Twitter Deal
A successful business. In April, Elon Musk made an unsolicited bid worth more than $40 billion for the social network, saying he wanted to make Twitter a private company and allow people to express themselves more freely on the service.
Mr. Musk originally planned to take out a loan of around $12 billion on his Tesla stock. But shares of the electric vehicle maker fell in the weeks after the deal was signed, making such a loan considerably riskier.
Twitter also asked for more information on any analysis the banks did on Mr. Musk’s instructions regarding the number of fake users on its platform. He cited his concerns about fake accounts on Twitter as the reason he wants to withdraw his offer.
What Mr. Musk’s bankers demanded – and why – could be crucial to the deal. Twitter’s ability to sue Mr. Musk to force him into the deal, under its “specific performance clause,” is nullified if its debt funding collapses. But that escape only works if the banks, who have signed letters of undertaking, walk away independently – not if Mr. Musk pushes them.
“The Delaware courts themselves are very suspicious of people who basically have their fingerprints all over the place in self-sabotage,” said Eric Talley, professor of corporate law at Columbia Business School.
Representatives for Morgan Stanley and Barclays declined to comment. A Bank of America spokesperson did not respond to a request for comment.
Mr. Musk filed a response to Twitter’s lawsuit on Friday, though it will be temporarily sealed from the public while he and Twitter negotiate which parts to redact. So far, his arguments justifying his decision to pull out of the Twitter deal have focused on the company’s public disclosures about bots and fake accounts.
His lawyers have suggested that these disclosures were materially misleading, which could give Mr. Musk reason to walk away from the deal. (Twitter’s lawyers asked what, exactly, was misleading.)
Twitter’s legal outreach over the past week also requested more information about conversations with a number of Silicon Valley heavyweights that Mr. Musk is known to be close to. This information could shed more light on the evolution of his thinking about a deal, once he started sending tweets implying that he might want to back down or take another cut for a lower price.
In a subpoena to Valor Equity Partners, the investment firm founded by Antonio Gracias, a longtime friend of Mr. Musk, Twitter lawyers requested more information about conversations with Chamath Palihapitiya, the director General of Social Capital, and David Sacks, a general partner. to investment firm Craft Ventures, among others. Both Mr Palihapitiya and Mr Sacks were at a private conference where Mr Musk expressed doubts about Twitter’s revelations about his number of fake accounts.
The Washington Post earlier reported that Twitter was seeking more information about Mr. Musk’s acquaintances.
A spokesman for Mr. Palihapitiya declined to comment. A spokeswoman for Mr. Sacks did not respond to a request for comment.
Twitter also asked Valor for any information regarding Bob Swan, a former Intel chief executive who played a key role in closing the deal. Twitter claimed Mr Musk fired Mr Swan, saying the two men were “not on the same page”, and later replaced him with Mr Gracias. But according to Twitter’s lawsuit, Mr Gracias ‘never seemed’ to take charge of the fundraising effort that Mr Swan ‘led’.
Mr. Gracias did not respond to a request for comment.
Kate Conger contributed report.