Twitter is suing Musk in Delaware court to force him to go through with his $44 billion plan to buy the San Francisco-based company. Musk is attempting to abandon the deal, claiming Twitter violated their agreement by failing to disclose accurate information around spam accounts. Twitter argues that Musk signed a contract to buy the company, and is using spam accounts as a false pretense to worm his way out of the deal.
Twitter’s subpoena outlines a list of 27 requests for Tesla, including internal communications at Tesla about Musk’s takeover plan, all communications between Musk and Twitter and between Musk and his co-investors (like Larry Ellison), and all documents related to the roughly $8.4 billion worth of Tesla stock that Musk sold to finance the takeover bid.
Musk is Tesla’s biggest shareholder, owning around 17 percent of the company’s shares, or about 175 million shares in total. Musk has sold large batches of shares before. Last year, he sold 15 million shares, worth more than $16 billion, after polling his followers on Twitter. Tesla’s share price is up slightly since the market opened today.
Twitter is also seeking materials related to the $6.25 billion margin loan commitment that Musk took out in May. The Tesla CEO had originally planned to take out a $12.5 billion margin loan, but later reduced it to $6.25 billion after bringing in co-investors on the deal. In April, Musk lined up $46.5 billion in debt and equity financing to buy Twitter, with Musk himself committing $33.5 billion.
Tesla will need to cough up all documents and communications related to Musk’s “tender offer” for some or all of Twitter’s shares, as well as any internal documents related to Musk’s May 13th tweet in which he announced that the Twitter deal was “on hold” pending additional information about spam bots on the platform.
Twitter also wants all of Tesla’s communications with media outlets regarding the merger deal — which could be interesting, considering that Tesla dissolved its public relations division in 2019 and typically ignores reporters’ requests for comment.
The Tesla subpoena is the latest in a flurry of information requests sent by Twitter’s legal team as the October 17th trial in Delaware Court of Chancery nears. Twitter has also subpoenaed a number of leading tech CEOs and venture capitalists, including Marc Andreessen, founder of VC firm Andreessen Horowitz; former Facebook exec and CEO of Social Capital Chamath Palihapitiya; and David Sacks, the founding chief operating officer of PayPal and current general partner at Craft Ventures.
According to the subpoena, the automaker has seven days to produce all the materials requested to Twitter’s legal team.