Twitter Is Assembling A Legal Team To Sue Musk Over Abandoned Acquisition


Twitter has hired merger rights heavyweight Wachtell, Lipton, Rosen & Katz LLP to sue Elon Musk for abandoning its $44 billion takeover of the company, according to people familiar with the matter.

The social media company plans to file a lawsuit earlier this week, according to the people, who declined to be identified because the matter is private. Hiring Wachtell gives it access to attorneys such as Bill Savitt and Leo Strine, who served as Registrar of the Delaware Chancery Court, where the case is being tried.

Musk has Quinn Emanuel Urquhart & Sullivan LLP. The firm led his successful defense against a 2019 defamation lawsuit and is representing him in an ongoing shareholder lawsuit over his failed attempt to privatize Tesla Inc. in 2018.

A Wachtell Lipton official declined to comment and Quinn Emanuel officials could not be reached. A Twitter spokesman declined to comment. Musk and Jared Birchall, the head of his family office, did not respond to a request for comment.

Delaware is home to more than half of US public companies, including Twitter, and more than 60 percent of Fortune 500 companies. There, chancellors — experts in business law — try cases without a jury and cannot award punitive damages. Based on previous merger struggles, efforts to end a deal can play out within a matter of months and often end in settlements to avoid further bickering.

Savitt, a partner of Wachtell, heads a select group of A-list lower court trial attorneys. Companies like health insurer Anthem Inc., real estate giant Sotheby’s and financial titan KKR & Co. have lined up on his doorstep when deals go awry or Delaware takeovers are contested.

Strine, who has worked in the Delaware courts for over 20 years, most recently as chief justice of that state’s Supreme Court, has helped shape the legal norms Musk is trying to test by terminating his agreement to acquire Twitter. Strine joined Wachtell in 2020.

Before becoming Chief Justice, he was Chancellor from 2011 and Vice Chancellor from 1998 at the Delaware Court of Chancery.

The Delaware Chancery Court typically disapproves of efforts to reverse merger agreements. It’s possible that one of Strine’s most influential decisions will determine how Musk makes the case for abandoning his Twitter acquisition.

In 2000, Tyson Foods Inc. agreed to sell competitor IPB Corp. to take over. Shortly after agreeing to the deal, the meat market suffered a precipitous downturn that impacted both companies financially. Tyson argued that it had received misleading information about IBP’s business and was therefore no longer obligated to complete the $3.2 billion merger.

In court, Strine disputed that there had been a material adverse change and ruled that Tyson must go through with the deal. The ruling became a landmark, and the Tyson-IBP case still serves as the basis for how courts and companies interpret a buyer’s ability to terminate a merger agreement.

Judges also have a say in whether breakup fees need to be paid. In the Musk-Twitter deal, that fee is $1 billion.

In a regulatory filing after the official market closed on Friday, Musk announced plans to drop his bid to buy Twitter at $54.20 per share because the company misrepresented user data. Twitter chairman Bret Taylor responded by promising to enforce the deal in what is expected to be an arduous court brawl.

Twitter shares closed 5.1 percent lower in official trade at $36.81 and fell another 4.8 percent in post-market activity to about $35. Twitter Is Assembling A Legal Team To Sue Musk Over Abandoned Acquisition

Fry Electronics Team

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