Twitter’s parent company, X Corp., has taken legal action against Wachtell, Lipton, Rosen & Katz, a prestigious corporate law firm on Wall Street. The lawsuit claims that the law firm received unjust payments in connection with Elon Musk’s acquisition of Twitter for a staggering $44 billion last year.
According to the lawsuit filed in the San Francisco Superior Court, Twitter made a payment of $90 million to Wachtell, Lipton, Rosen & Katz, one of the top firms specializing in mergers and acquisitions. However, Twitter now alleges that this payment amounted to “unjust enrichment” and is demanding its return. The lawsuit accuses Wachtell Lipton of taking funds from Twitter while the acquisition was being finalized, and insists that the payment should be reimbursed.
Wachtell Lipton was retained by Twitter’s previous management after Elon Musk attempted to back out of the acquisition agreement. Despite Musk’s unsuccessful attempt, the deal was eventually completed in October. However, both Wachtell Lipton and a spokesperson for Twitter declined to comment on the ongoing lawsuit.
This is not the first instance in which Twitter has faced disputes regarding fees associated with Musk’s purchase of the company. In February, advisory firm Innisfree M&A filed a lawsuit against Twitter, seeking $1.9 million in unpaid bills. Subsequently, in May, Joele Frank, a public relations firm, sued Twitter for approximately $830,498, claiming that the company failed to compensate them for services rendered in relation to the acquisition.
Wachtell Lipton is a renowned law firm on Wall Street, having been involved in numerous high-profile deals, including Elon Musk’s unsuccessful attempt to privatize Tesla in 2018. The firm is well-known for charging substantial fees, establishing itself as one of the most profitable law firms per partner.
This isn’t the first time Wachtell Lipton has faced legal action. Previously, the firm was sued by activist investor Carl Icahn over its role in his hostile takeover attempt of CVR Energy in 2012. However, the lawsuit against Wachtell Lipton was ultimately dismissed.
Documents submitted with the recent lawsuit reveal that Twitter’s board and executives approved the $90 million payment to Wachtell Lipton based on their successful efforts in ensuring Musk’s compliance with the acquisition agreement. However, the lawsuit argues that the approval of the payment constituted a breach of fiduciary duty by Twitter’s former executives and board members. It alleges that they hastily closed the deal without acting prudently or making informed decisions.
The lawsuit further highlights that Wachtell Lipton received the majority of the $90 million fee just 10 minutes prior to the closure of the deal in October. Shortly after receiving the transfer, Musk dismissed several top executives at Twitter, including the chief legal officer and general counsel, as alleged in the lawsuit.
As the legal battle unfolds, the outcome will determine whether Twitter’s claims of unjust enrichment against Wachtell, Lipton, Rosen & Katz hold merit. The lawsuit puts a spotlight on the intricate dynamics surrounding high-value acquisitions and the role of legal representation in ensuring compliance and protecting the interests of all parties involved. Only time will tell how this legal dispute will be resolved and its potential impact on future mergers and acquisitions within the corporate landscape.
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