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Musk Hasn’t Handed Over His Texts With Morgan Stanley’s CEO, Twitter Says

(Bloomberg) -- Twitter Inc. is complaining Elon Musk’s legal team hasn’t turned over his texts with Morgan Stanley Chief Executive Officer James Gorman ahead of trial over the $44 billion acquisition offer Musk is trying to cancel.

Lawyers for Twitter asked Delaware Chancery Court Judge Kathaleen St. J. McCormick at a hearing Tuesday to sanction the billionaire and his lawyers for not producing texts with Gorman and Oracle Corp. Chairman Larry Ellison. The judge said she was “troubled” by how Musk’s team handled the messages, but said she’ll rule later.

Twitter subpoenaed the texts before the Oct. 17 trial in Wilmington, Delaware, in which McCormick will decide whether the world’s richest person had legitimate grounds for walking away from his $54.20-per-share offer to buy the social media platform. Morgan Stanley was Musk’s chief financial adviser and pledged more than $5 billion in financing, while Ellison invested $1 billion.

According to Twitter’s court filings, Musk withheld four texts with Gorman, including some from April 25, the day the company accepted Musk’s offer. “The time has come for the court to issue a severe sanction” over the handling of texts and emails by Musk and his top aides, said Bradley Wilson, one of Twitter’s lawyers.

During the hearing Tuesday, the Twitter team also complained Musk’s lawyers with dragging their feet in disclosing research that may show the extent of spam and robot accounts on the platform wasn’t nearly as significant as the billionaire claimed publicly.

‘Early Morning’ Texts

Earlier this month, Twitter’s legal team pointed to a May text by Musk to another Morgan Stanley banker seeking to slow down the deal process until after Russian President Vladimir Putin gave a speech the following day about the war Ukraine. “It won’t make sense to buy Twitter if we’re heading into World War III,” Musk wrote.

Twitter is also targeting texts between Musk and Ellison just before the former announced he was withdrawing his offer. The two billionaires were communicating “into the early morning hours,” Twitter said.

“Musk sent his final message to Ellison at 12:20 a.m. on May 13,” according to the filing. About four hours later, Musk tweeted he was putting the deal on hold over concerns Twitter was under-counting the number of bot accounts on the platform.

Twitter further complained Musk failed to turn over some of his own texts as well as some from top aide Jared Birchall and lead lawyer Alex Spiro. The company said it was able to obtain some of the texts from the other parties copied in the messages. Twitter called this another example of Musk’s “lackadaisical efforts” to hand over relevant information.

A spokesman for Musk’s lawyers didn’t have any immediate comment Tuesday. Mary Claire Delaney, a Morgan Stanley spokeswoman, and an Oracle spokesperson declined to comment.

McCormick denied a previous Twitter request for sanctions but sharply criticized Musk for failing to turn over texts. She noted Musk produced June 17 texts that Robert Steel of Perella Weinberg sent him 18 minutes apart. Steel first asked a question and then subsequently texted, “Ok. Got it...,” leaving a clear gap in the exchange, the judge said.

“Assuming that Musk’s response was not telepathic, one would expect some evidence of it in defendants’ document production,” McCormick wrote. “But defendants provided none by the deadline.”

Twitter seeks to convince McCormick that Musk pulled out of the deal because of buyer’s remorse, not over concerns about the number of bots embedded in the platform’s more than 230 million users.

On Tuesday, the company’s lawyers complained their counterparts were dragging their feet in turning over unredacted reports by data scientists hired by Musk to assess the bot issue.

Some of the materials already produced show Musk’s experts found only about 11% of the customer base was made up of bots, Wilson said. Twitter estimated in securities filings bots make up about 5%.

Musk claims his analysis shows as much as a third of Twitter’s customers may be robots rather than humans and the platform’s executives misled him and company investors about the issue to protect advertising revenue.

“We think it’s clear why” the Tesla CEO wants to avoid turning over the full bot reports because they are at odds with his estimates, Wilson said. McCormick said she’d rule later on the issue.

The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).

(Updates with judge’s comment in hearing starting in second paragraph)

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