Twitter won an early victory in its battle to get Elon Musk to complete its $44 billion acquisition of the company, after a judge granted the company’s request and set an expedited trial that will begin in October.
In her ruling, Kathleen McCormick, chancellor of the Court of Chancery for the state of Delaware, warned that the “cloud of uncertainty” over Twitter’s business would become thicker in the event of a long wait for a trial.
“The reality is that delay threatens to cause irreparable harm to sellers,” McCormick said, ordering a five-day trial and adding that the court was able to handle the expedited process.
During the hearing, Twitter’s lawyers accused the Tesla billionaire of “attempted sabotage” against the company and said a quick trial, lasting four days, was needed to prevent further damage to the company’s business.
Lawyers for the social media platform said uncertainty over the transaction damages Twitter “every hour of every day”, and urged the judge to set a trial date in mid-September.
While the trial is scheduled for a little later and is expected to last a day longer than Twitter requested, the judge’s decision is much closer to what the company asked for than to Musk’s position. His lawyers argued that the trial should not start until 2023, and called Twitter’s proposed timetable “absurd”.
On July 8, Musk announced that he would withdraw his bid to acquire Twitter at $54.20 per share, claiming that the company had violated the merger agreement by failing to disclose sufficient information about its number of fake accounts, and mislead regulatory authorities on this matter.
Twitter has filed a lawsuit against Musk to try to force him to complete the transaction, and accuses him of repeatedly violating the terms of the merger agreement and trying to abandon the proposal because of the slump in tech markets since the deal closed. in April.
In the first legal duel between the Silicon Valley company and the world’s richest man on Tuesday, the social media company argued that Musk is hurting its business by inciting netizens against it and disrupting its operations, for example by refusing to approval for the company’s plans for staff retention.
“It’s an attempt at sabotage,” Bill Savitt of the law firm Wachtell, Lipton, Rosen & Katz, one of Twitter’s lawyers, said during the hearing. “He’s trying to do everything he can to take down Twitter. He’s doing everything he can to put Twitter under threat, he’s doing everything he can to expose Twitter, and he’s doing all this as a way of escaping a contract he promised to consummate.” “.
Savitt also argued that the trial should be expedited to allow sufficient time for any decision to be enforced before the transaction funding agreements between Musk and the banks expire in April 2023.
Musk’s team had proposed that the trial begin no earlier than February. Representing the businessman, attorney Andrew Rossman of the Quinn Emanuel law firm argued that the debate over fake Twitter accounts required a longer investigation because “immense amounts of data” and “billions of shares on its platform” would have to be analyzed.
Rossman said Twitter had only accused Musk of violating the merger agreement after he decided to walk away from the transaction, adding that “you can’t first delay seeking a court solution and then come forward to ask for it to be expedited.”
He also accused Twitter of “rolling” Musk’s team when it requested more information about the fake accounts, and said Musk had no incentive to harm the company since, as its second-largest shareholder, he has “an economic interest in the company much bigger” than that of the Twitter board.
Analysts speculated that Musk may have regretted the transaction due to the collapse in tech stock prices after he reached a deal to acquire Twitter at $54.20 a share in April. Twitter shares are now priced at $39.07. The two parties could renegotiate the transaction, at a lower price, or reach an agreement on the process.
Translation by Paulo Migliacci
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