Musk’s Twitter subpoena storm gets everyone wet

WASHINGTON, Aug 19 (Reuters Breakingviews) – Elon Musk and Twitter (TWTR.N) are trying to grab each other’s dirty laundry by going after splashy technology players and white shoe law firms. Lawyers for the Tesla (TSLA.O) boss have issued a wide range of subpoenas as part of the legal fight over the $44 billion purchase of the social network. Salesforce (CRM.N), which considered buying Twitter in 2016, is the latest to be dragged into the spat. That’s awkward since Twitter’s chairman Bret Taylor is the co-chief executive of the software company. The parties have more incentive to settle.

The increasingly acrimonious legal battle is bad for both the buyer and seller. Twitter sued Musk in July to uphold the deal after he said he was backing away because of alleged breaches of the merger agreement. Since then, they’ve flooded each other with requests for documents and depositions as they prepare for an October trial, a major distraction for both Musk and Twitter Chief Executive Parag Agrawal.

The wide net of legal requests raises the potential for embarrassment. Advertising technology companies Integral Ad Science (IAS.O) and DoubleVerify (DV.N) were among others subpoenaed on Thursday, according to filings in a Delaware court. Musk wants communications around reviews of Twitter accounts to verify users; fake accounts are a major contention in the deal. He even served Twitter’s law firm, Wachtell, Lipton, Rosen & Katz, an unusual move in an M&A lawsuit.

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Twitter is also doing its part. It has subpoenas out to people who planned to co-invest with Musk on the Twitter buyout, including Oracle (ORCL.N) founder Larry Ellison and venture capitalist Marc Andreessen. It also wants information from Tesla and banks offering financing for the Twitter deal, including Morgan Stanley (MS.N). Even people whose involvement in the case is unclear, like Citadel founder Ken Griffin, have also been named. He is listed as a potential Musk co-investor.

Past deal fights show how revealing they can be. Take the Aerojet Rocketdyne (AJRD.N) battle over board seats and a scrapped sale to Lockheed Martin (LMT.N). The company’s Chief Executive Officer Eileen Drake told a Delaware judge in May that Chairman Warren Lichtenstein offered to buy her a Hermes bag to entice her to change deal terms.

Musk isn’t known for discretion while Twitter rushed to sell to him. That means there could be a lot of skeletons in the closet. Both sides, and all those subpoenaed, are better off ensuring that what happened in the Twitter deal stays in the Twitter deal.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

Elon Musk’s lawyers issued subpoenas for Salesforce, Integral Ad Science and DoubleVerify as part of the Tesla chief executive’s legal battle over the $44 billion purchase of Twitter, according to filings on Aug. 18 in a Delaware court.

Twitter sued Musk to force him to uphold his deal, which he said he has terminated for material breaches of their agreement. Twitter Chairman Bret Taylor is the co-chief executive of Salesforce while Integral Ad and DoubleVerify are advertising technology companies. Musk is seeking communications into the review of Twitter accounts to verify authentic users.

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Editing by Jennifer Saba and Sharon Lam

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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