The San Francisco company is preparing to file its lawsuit in Delaware District Court against Musk early this week, one of the people said. Musk said Friday he planned to back out of his deal to buy Twitter, citing three violations of the merger agreement by the social media platform. In response, Twitter promised to hold the mercurial billionaire to his original deal terms and price of $54.20 per share, in what could turn into a messy legal battle that would dictate the company’s future.* Wachtell Lipton has perhaps the leading litigation practice in Delaware, where the majority of US public companies are based. He defends companies in lawsuits for breach of fiduciary duty and broken merger agreements in the state.

The company had initially defended Musk in a shareholder lawsuit brought in Delaware by Tesla shareholders who claimed Musk had improperly bailed out SolarCity, another part of Musk’s empire, when Tesla acquired the clean energy company in 2017 . Earlier this year, Musk was cleared by a Delaware judge of any wrongdoing in that case. He was represented by the law firm Cravath, Swaine & Moore in the 2021 trial. Twitter declined to comment on Wachtell’s appointment, which was first reported by Bloomberg. Wachtell did not immediately respond to a request for comment. In a regulatory filing on Friday, Musk’s team argued that Twitter had not provided enough information to prove that the number of fake and spammy accounts on its platform is less than 5 percent, as it has long estimated. The filing claimed that the actual number may actually be “wildly higher,” suggesting that the company had made false statements in its regulatory filings. He also accused Twitter of failing to comply with its obligation to “conduct its business in the ordinary course” by firing several senior employees after the deal was struck. Twitter, which denies Musk’s claims, has an incentive to push the deal or extract a higher fee from Musk than the $1 billion already agreed upon. Its share price has fallen more than 30 percent since the Tesla chief made his offer and no other buyers have emerged. It comes as the company has been mired in crisis, announcing mass layoffs and cost-cutting measures in recent weeks. Among the remaining employees, morale is low due to job uncertainty and division over whether Musk, who has promised to bring a “free speech” ethos to the platform, should run it. We see Elon Musk’s baseless claims that [Twitter] misleads investors about [percentage] fake accounts as an excuse to back out of the deal Twitter is likely to argue that Musk’s concerns merely mask buyer’s remorse over an expensive and highly leveraged deal amid a broader rout in tech stocks. It is an interpretation shared by many analysts and legal experts. “We see Elon Musk’s baseless claims that [Twitter] misleads investors about [percentage] of fake accounts as an excuse to back out of the deal,” Jefferies equity analyst Brent Thill wrote in a research note on Sunday. Twitter has long publicized the 5 percent figure, “making us question the validity of Musk’s concerns,” he added. Eric Talley, a Columbia law professor, said Musk’s arguments were “particularly weak” given that Twitter’s disclosures of fake accounts are estimates. He added that while an agreement in the merger agreement states that Twitter must comply with requests for information within reasonable limits, the company will be able to argue that sharing vast amounts of private user data does not qualify. “[The requests] they’re just not going to pass muster,” he said. “This may well be partly a negotiating strategy to try to threaten. . . that this is going to be such a torturous litigation process that they might as well accept either a settlement or a reduced price to move forward.” Additional reporting by Alexandra Scaggs in New York *This story has been amended to correct the agreed sale price