Elon Musk ‘Conduct’ in Twitter Acquisition Under Federal Investigation

There’s a new wrinkle in the six-month-plus saga of Elon Musk’s mercurial attempt to buy Twitter.

The multibillionaire is being investigated by federal authorities over his “conduct” in connection with his proposed Twitter acquisition, according to a letter from the company’s lawyers filed with the Delaware Chancery Court. The letter was filed Oct. 6 and released publicly Thursday. Twitter sued Musk in the Delaware court, demanding that he fork over the $44 billion he had agreed to under the binding pact reached in April.

Twitter asserted that Musk’s legal team “exchanged substantive correspondence” with federal authorities — and that despite Twitter requesting copies of those documents “months ago” they had still not materialized. Twitter filed a motion seeking to have the court order Musk to produce the documents. Its letter cited drafts of a May 13 email to the SEC and a slide presentation to the FTC that Musk’s attorneys had identified as privileged documents.

“This game of ‘hide the ball’ must end,” the company’s filing said. “Twitter wants those documents, because they bear upon key issues in this litigation.”

Musk attorney Alex Spiro told Bloomberg and other outlets that the Twitter filing was a “misdirection” and claimed that it is actually Twitter’s executives who are under federal investigation. Twitter denied in a statement to Bloomberg that it is being investigated.

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Last week, the judge in the Delaware case granted Musk’s motion to halt Twitter’s trial until Oct. 28 to allow the parties to close the $44 billion deal. The trial was slated to begin Oct. 17.

That came after Musk on Oct. 3 informed Twitter that he would proceed with his original $54.20-per-share offer for the company after all, contingent on Twitter dropping its litigation. Previously, on three different occasions, Musk argued that he was justified in walking away from the agreement because (he had alleged) Twitter violated the merger terms — and analysts interpreted his about-face as a sign that Musk concluded that he likely wouldn’t prevail in court. Twitter’s attorneys have argued that Musk simply had not wanted to pay what he originally promised because his net worth declined with a drop in Tesla’s stock price.

Musk, according to a court filing by his attorneys, expects to finalize the debt financing he needs to close the Twitter deal by Oct. 28. Twitter had opposed delaying the trial, saying in a court filing that doing so was “an invitation to further mischief and delay.”

According to the most recent SEC filing from Musk’s team pertaining to his proposed Twitter buyout, in May, the $44 billion offer comprised $27.25 billion in equity financing, $6.25 billion in margin loans and $10.5 billion in debt financing.