Musk demands documents from Jack Dorsey as part of Twitter deal

WILMINGTON, Delaware, Aug 22 (Reuters) – Billionaire entrepreneur Elon Musk is seeking documents from Twitter Inc.(TWTR.N) Co-founder Jack Dorsey as CEO of Tesla and SpaceX is continuing his legal fight to back out of his $44 billion deal for the social media company, according to a court filing.

Dorsey, who resigned as Twitter’s chief executive in November and quit the board in May, has been asked for documents and communications about Musk’s April deal to buy the company and on spam accounts on the platform, according to a copy of the subpoena.

Dorsey, CEO of payment processing company Block Inc, did not immediately respond to a request for comment. Block was co-founded by Dorsey and changed its name last year from Square Inc.(SQ.N).

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Musk, the richest person in the world by virtue of his stake in Tesla Inc, told Twitter in July he was ending the deal to buy the company for $54.20 a share because he alleged that Twitter breached the contract. Twitter and Musk have since sued, with Twitter asking a Delaware Court of Chancery judge to order Musk to make the deal. A five-day trial is scheduled to begin on October 17.

The subpoena sought documents and communications about Twitter’s use of mDAU, a measure of active users on its platform. Musk alleged the company defrauded him by hiding the number of fake accounts in its regulatory filings, which Musk said he used to assess the company.

Twitter has denied Musk’s spamming allegations.

Twitter CEO Jack Dorsey addresses students during a town hall meeting at the Indian Institute of Technology (IIT) in New Delhi, India November 12, 2018. REUTERS/Anushree Fadnavis/

Musk also wanted documents and communications regarding alternative active user metrics the company has considered and information about the use of mDAU in executive compensation and annual goals.

Twitter declined to comment.

Dorsey had backed Musk’s takeover bid for Twitter as the pair agreed on the need for more transparency for its algorithm and to give users more control over the content they see.

Dorsey also tweeted that he thinks Twitter is being held back by the advertising model and Musk said Twitter should rely more on subscription fees and services such as user-to-user money transfers.

Musk and Dorsey had discussions in March about Musk joining Twitter’s board before Musk revealed he had acquired a 9.1% stake in Twitter. Musk accepted a seat on the board, but before starting his term he changed course and offered to buy the company.

Shares of Twitter fell 2.5% to $42.89 in Monday night trading.

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Reporting by Tom Hals in Wilmington, Delaware; additional reporting by Katie Paul in San Francisco; Sheila Dang in Dallas; Editing by David Gregorio

Our standards: The Thomson Reuters Trust Principles.

Tom Hall

Thomson Reuters

Award-winning journalist covering US courts and law, from the COVID-19 pandemic to high-profile criminal trials and Wall Street’s biggest failures with more than two decades of international financial news experience in Asia and Europe.

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