Musk seeks documents from Jack Dorsey in fight over Twitter deal

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

By Tom Hals

WILMINGTON, Del. (Reuters) - Billionaire entrepreneur Elon Musk is seeking documents from Twitter Inc (NYSE:TWTR) co-founder Jack Dorsey as the CEO of Tesla (NASDAQ:TSLA) and SpaceX pursues his legal fight to walk away from 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 left the board in May, was asked for documents and communications about Musk's April agreement to buy the company and about spam accounts on the platform, according to a copy of the subpoena.

Dorsey, who is CEO of payments 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 (NYSE:SQ).

Musk, the world's richest person due to his stake in Tesla Inc, told Twitter in July he was ending the agreement to buy the company for $54.20 per share because he alleged Twitter had violated the deal contract. Twitter and Musk have since sued each other, with Twitter asking a judge on the Delaware Court of Chancery to order Musk to close the deal. A five-day trial is set to start on Oct. 17.

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

Twitter has denied Musk's spam allegations.

Musk also wanted documents and communications regarding alternative measures of active users that the company has considered and information about the use of mDAU in executive pay and annual targets.

Twitter declined to comment.

Dorsey had supported Musk’s buyout offer for Twitter as the two men have agreed on the need for more transparency for its algorithm and allowing users more control over the content they see.

Dorsey has also tweeted that he believes Twitter is held back by the advertising model and Musk has said Twitter should rely more on subscription fees and services such as money transfers between users.

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

Shares of Twitter were down 2.5% at $42.89 in late Monday trade.