Twitter hires a team of lawyers to sue Musk for “repentance”

       Twitter has hired M&A law heavyweight Wachtell, Lipton, Rosen & Katz to sue Elon Musk over the world’s richest man’s sudden abandonment of his $44 billion acquisition of Twitter, people familiar with the matter said.

  In related news: Twitter hires legal team to sue Musk

Twitter plans to formally launch the lawsuit earlier this week, people familiar with the matter said. Hiring Wachtell will give Twitter access to lawyers including Bill Savitt and Leo Strine, who served as chancellor of the Delaware Court of Chancery where the case will be heard.

Musk, for his part, has retained Quinn Emanuel Urquhart & Sullivan LLP to represent him in the lawsuit. The law firm had successfully helped him win a defamation lawsuit in 2019 and defended him in a series of lawsuits stemming from the failed Tesla privatization in 2018.

A Wachtell Lipton spokesman declined to comment, and a Quinn Emanuel spokesman has yet to respond. A Twitter spokesman declined to comment. Musk and the head of his family office, Jared Birchall, also have not yet responded to the matter.

More than half of all U.S. public companies and more than 60 percent of Fortune 500 companies, including Twitter, have offices in Delaware. There, a judge in equity will hear a case without a jury, but cannot make an award of punitive damages. According to previous M&A litigation, lawsuits aimed at terminating transactions can usually be concluded within a few months and often end in settlements to avoid further disputes.

Savitt, who is a Wachtell partner, is a leader among the top litigators in equity courts. Companies including health insurer Anthem, real estate giant Sotheby’s and financial giant KKR have turned to him for help when deals have been thwarted.

Sterling was a lawyer in Delaware for more than 20 years and recently served as chief justice of the state’s Supreme Court. It was he who was involved in shaping the legal norms that Musk will face in this abandoned acquisition of Twitter. Sterling joined Wachtell in 2020.

Prior to becoming chief justice, Sterling had served as a Delaware Court of Chancery justice since 2011 and as an associate justice since 1998.

The Delaware Court of Chancery has generally disapproved of the practice of withdrawing from merger agreements. One of Sterling’s most influential rulings may determine how Musk should justify his abandonment of the Twitter acquisition.

In 2000, Tyson Foods agreed to buy rival IPB, but shortly after the deal was struck, the meat market suffered a major setback that had an impact on both companies’ finances. Tyson argued that the business information provided by IBP was misleading and therefore stopped fulfilling its $3.2 billion merger obligation.

In court, Sterling disagreed that there had been a “material adverse change” and ruled that Tyson must complete the transaction. This decision became an important milestone, and the Tyson-IBP case remains an important basis for courts and companies to interpret whether a buyer can terminate a merger agreement.

Judges also have the authority to decide whether a break-up fee must be paid. The breakup fee in the Musk acquisition of Twitter amounted to $1 billion.

Musk said in a regulatory filing after the U.S. stock market closed on Friday that he plans to abandon his $54.20-a-share acquisition of Twitter, accusing the company of misleading user data. Twitter Chairman Gret Taylor, for his part, vowed to push the deal through legal means.

Twitter fell 5.1 percent to close at $36.81 in regular trading on the New York Stock Exchange on Friday, and fell another 4.8 percent to $35 in subsequent after-hours trading.


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