Band Tom Halls

WILMINGTON, Delaware, August 2 (Reuters) – Twitter Inc. TWTR.N is trying to find evidence that Elon Musk tried to torpedo funding for his $44 billion takeover deal for the social media company while examining his motivation for pulling out of the deal, legal experts have said.

Twitter sent dozens civil status subpoenas this week to global banks such as units of Morgan Stanley MS.Nco-investors in the transaction, including a subsidiary of Brookfield Asset Management Inc. BAMa.TOand advisers to Musk, according to documents filed over the past two days in the Delaware Court of Chancery.

Morgan Stanley declined to comment. Brookfield did not immediately respond to a request for comment. Representatives for Musk and Twitter could not be reached.

Subpoenas are intended to obtain documents and communications regarding the operation, its financing, any information about “bot”, or fake Twitter accounts. They are also looking information recipients may have about the potential impact on the transaction evolution of the share price of the electric car manufacturer Tesla Inc TSLA.Oof which Musk is the chief executive.

The subpoenas are part of Twitter’s lawsuit against Musk seeking to hold him to the $54.20 per share deal he agreed to. A five-day trial is due to begin Oct. 17 in Delaware Court of Chancery.

Experts said the subpoenas indicate Twitter wants to know what lenders, investors and advisers were saying to each other about Musk’s behavior after he signed the deal in late April.

“They suspect that behind the scenes he conspired to blow it all up,” said UConn School of Law professor Minor Myers.

Musk said on July 8 that he was walking away from the deal because Twitter allegedly violated the agreement by withholding data on fake accounts on the platform. Twitter said fake accounts distract from the only issue that matters, which is the terms of the deal. Musk also said he was walking away because Twitter terminated senior executives and a third of the talent acquisition team, violating Twitter’s obligation to “preserve material components of its current business organization substantially intact.” “.

Musk cannot be ordered to complete the deal if the financing fails – provided he is not the cause of the failure of the financing, according to legal experts.

Twitter’s subpoenas focused on what it said was the firing of Bob Swan, an operating partner at venture capital firm Andreessen Horowitz, who initially led Musk’s efforts to complete funding for the company. ‘OK. He was replaced by longtime Musk associate Antonio Gracias, according to Twitter’s lawsuit.

Brian Quinn, a professor at Boston College Law School, said Twitter seems to want to know if “Gracias had a hand in getting the funding or was just supposed to slow things down.”

Swan did not immediately respond to messages sent via LinkedIn and to Andreeesen Horowitz. Gracias did not respond to a request for comment sent to his company Valor Equity Partners.

Experts said Twitter would be interested in understanding lenders’ concerns about the number of fake accounts on the platform, and if it was a problem for them, as Musk suggested.

Investors were invited for communications about the Twitter deal with people close to Musk, like Steve Jurvetson, a former Tesla board member and current head of SpaceX, the private rocket company founded and run by Musk.

Jurvetson did not immediately respond to a request for comment sent to his company Future Ventures.

“lol, lawyers with TWTR are sending subpoenas to friends in the ecosystem around @elonmusk,” wrote Joe Lonsdale, co-founder of Palantir Technologies Inc. PLTR.N, on Twitter. “Have nothing to do with this other than a few sarcastic comments, but I received a notice of ‘YOU ARE HEREBY ORDERED’ document,” he wrote.

He called the Twitter subpoenas a “giant harassing fishing expedition”.

Lonsdale did not immediately respond to a request for comment sent to his company 8VC.

Theodore Kittila, a Delaware corporate attorney, said Twitter was trying to determine what Musk was saying privately while publicly tweeting that he was concerned about bots and fake accounts on Twitter.

“They’re trying to climb in there, behind the tweets,” Kittila said. “They’re going through emails and trying to figure out what conversation actually took place and what prompted his decision to put the deal on hold.”

Musk sent his own subpoenas in the past two days to Concentrix Solutions Corp CNXC.Oa data analytics company, and TaskUs USA TASK.O, which moderates the content. Musk’s subpoena questions were filed under seal.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler)

((thomas.hals@thomsonreuters.com; +1 610 544 2712; Reuters Messaging: thomas.hals.thomsonreuters.com@reuters.net))

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