The Elon Musk Saga v. Twitter (TWTR), which has occupied business circles since April, is not stingy with twists and turns.
The billionaire revealed on April 4 that he held more than 9% of Twitter.
But he had used a form suggesting that he was going to be a passive investor, in other words he would not try to influence the strategy of the platform.
But the next day, the CEO of Tesla (TSLA) changed strategy by sending another regulatory filing, this time using a form suggesting that he will be an activist investor.
From there began a cat-and-mouse game between Musk and Twitter, culminating in the tech tycoon launching a bid to acquire the entire social network for $44 billion on the 14th April.
Unconventional Battle
After some hesitation, Twitter accepted the offer on April 25. But Musk continued to publicly criticize the company and mock its executives. He then withdrew his offer on July 8, accusing the microblogging website of lying to him about the number of fake accounts, or spam bots, on the platform.
Four days later, Twitter filed a lawsuit, asking the Delaware Chancery Court to force Musk to honor his offer. A quick five-day trial had been set for October 17.
But two weeks before the start of the trial, Musk did an about-face, announcing that he was putting his $44 billion offer back on the table despite the fact that market conditions had changed dramatically. In other words, he is paying too much for Twitter. In exchange for his offer, the billionaire demanded that Twitter withdraw its complaint and stop all ongoing proceedings.
Given the adverse climate marked by mutual distrust, Twitter did not immediately accede to Musk's request. Chancellor Kathaleen McCormick has given the two sides until October 28 to reach an agreement. If unsuccessful, she will reschedule the trial for November.
Here is a guide about this unconventional battle
The saga has just offered new revelations. In court documents made public on October 13, Musk is revealed to be under investigation by regulators over his Twitter bid. The document is a request from Twitter's lawyers asking that the court compel Musk's lawyers to provide them with documents about their communications with federal authorities about the billionaire's Twitter bid.
We also learn that Twitter asked the lawyers for these documents several months ago. But Musk's attorneys believe the documents are protected by attorney-client privilege.
Musk Under Federal Investigations
"Elon Musk is presently under investigation by federal authorities for his conduct in connection with the acquisition of Twitter," lawyers for Twitter said in a letter sent on the same day day the court granted the two sides an extension to finalize the deal. "Through counsel, he has exchanged substantive correspondence with those authorities concerning their investigations."
Twitter's representatives referenced a letter from the Securities and Exchange Commission sent to Musk in June in which the federal agency sought information about a post of May 17 from Tesla's chief executive officer.
The documents would "create no real burden, because they are a discrete set of easily identifiable materials within the files of the attorney who wrote, reviewed, or received them," Twitter's lawyers said.
"This game of 'hide the ball' must end," they continued.
Contacted by TheStreet, Alex Spiro, an attorney for Musk, said this is a "misdirection" from Twitter.
While the court document says Musk is under investigation by federal authorities, they don't say what those investigations are about.
The Information reported in April that the Federal Trade Commission (FTC) was investigating whether Musk had failed to comply with antitrust requirements related to his intentions to be a passive investor or an active investor.
It should be noted, however, that Twitter indicated in June that the transaction had obtained the approval of antitrust authorities including the FTC and the Department of Justice.
"We note that on May 17, 2022, Elon R. Musk referred to the pending acquisition of Twitter, Inc. and publicly stated via his Twitter feed that "[t]his deal cannot move forward", the SEC wrote in its June letter to the billionaire on June 2. "The term 'cannot' suggests that Mr. Musk and his affiliates are exercising a legal right under the terms of the merger agreement to suspend completion of the acquisition of Twitter or otherwise do not intend to complete the acquisition."
The regulator believed at the time that this statement should have been disclosed to the financial community by amending a previous document filed with the SEC.
"Mr. Musk does not believe, however, that the May 17, 2022 social media posts regarding spam and fake accounts on Twitter Inc.’s platform triggered any required amendment to his previously" filing, Musk's lawyers responded to the regulator on June 7.
