Updated at 22:00 GMT as Twitter confirms lawsuit has been filed

A historic courtroom showdown is on the cards this week as an array of top lawyers line up to represent Twitter and Elon Musk in a takeover saga that has taken a dramatic new twist.

Twitter has tapped Wachtell Lipton Rosen & Katz to represent it in a lawsuit the social media giant is bringing against Elon Musk following his attempt to pull out of his agreed $44bn takeover of the company. Wachtell joins fellow Wall Street firm Simpson Thacher & Bartlett and Silicon Valley leader Wilson Sonsini Goodrich & Rosati in representing Twitter.

Musk, meanwhile, has engaged litigation powerhouse Quinn Emanuel Urquhart & Sullivan for the case, which is set to be heard in the Delaware Court of Chancery, a non-jury trial court that deals with corporate law in the state of Delaware. 

Twitter's chairman, Bret Taylor, confirmed in a Tweet today (12 July) that it had filed a lawsuit to ‘hold Elon Musk accountable to his contractual obligations’, Musk having agreed to buy the microblogging site in April, 10 days after an unsolicited bid for the company had initially led to talk of a poison pill defence.

In engaging Wachtell, it will have access to top lawyers including William Savitt, co-chair of Wachtell’s litigation department, and Leo Strine, who spent more than two decades working in the Delaware courts, most recently as Chief Justice of the state’s Supreme Court, before joining the Wall Street firm in 2020.

The latest twist in the saga began last Friday when Musk's M&A adviser, Skadden partner Mike Ringler, sent a letter to Twitter’s CLO, Vijaya Gadde, announcing that Musk was terminating the deal on the grounds that Twitter was ‘in material breach of multiple provisions’ of the merger agreement. 

He argued that Twitter had ‘failed or refused to provide’ Musk with adequate information to assess the extent of spam accounts on the platform, despite Musk and his financial advisors at Morgan Stanley asking for such information repeatedly since May. 

He also claimed Twitter had breached the merger agreement by not obtaining consent before firing two high-ranking employees, announcing it would lay off a third of its talent acquisition team and instituting a general hiring freeze. 

The letter listed New York-based Quinn Emanuel partners Alex Spiro and Andrew Rossman as Musk's counsel. Spiro co-chairs the firm’s investigations, government enforcement and white collar defence practice, while Rossman was at the forefront of recent ‘busted deal’ cases in the chancery court in Delaware, winning both of the landmark cases that went to trial during the height of the pandemic – AB Stable v. MAPS Hotels, where he represented the buyer, and Snow Phipps vs. KCAKE Acquisition, where he represented the seller. 

In a letter to Ringler dated 10 July and filed publicly on Monday, Wachtell's Savitt wrote that Twitter had ‘breached none of its obligations’ under the agreement and that Musk’s attempt to walk away from the deal was ‘invalid and wrongful’.

‘The purported termination is invalid for the independent reason that Mr. Musk and the other Musk Parties have knowingly, intentionally, wilfully, and materially breached the Agreement,’ he wrote, adding that the agreement was not terminated. 

The letter cited three clauses of the contract that Twitter claimed had been breached by Musk and his team, one relating to Musk’s obligation to assist with preparing regulatory filings on the merger, another to not post tweets about the deal that disparaged Twitter and the third relating to Musk’s responsibility to assist with raising the debt and equity financing to fund the merger.

The New York Times reported today that it had obtained an internal memo to employees by Twitter general counsel Sean Edgett informing them about the suit and the filing of a motion ‘for an expedited trial alongside the complaint, asking for the case to be heard in September, as it is critically important for this matter to be resolved quickly’. 

An analysis of previous Delaware court battles over disputed merger deals provides few clues as to who will prevail if the tussle runs its course. 

Bloomberg Law wrote: ‘Those earlier decisions resulted in a range of outcomes, including one in which LVHM and Tiffany & Company renegotiated their deal, Fresenius was able to drop its purchase of Akorn, and neither side won in a battle between Anthem and Cigna.'

Angelo Zino, an analyst at CFRA Research, told NPR there was “no chance” the deal would go through at $54.20 per share as originally agreed in April, seen at the time as a somewhat low offer given that Twitter stock traded at more than $70 last year.

The value of Twitter has dropped sharply since the merger was agreed amid a wider decline in the value of tech stocks and the market in general, and currently trades at around $35.

"You’re either going to see a 15 to 20% drop in the offer price to get Elon Musk engaged again, or he continues to play the bot card,” Zino said.