Twitter, Musk get October date for $44b deal trial
Social media platform, Twitter’s lawsuit to hold Elon Musk to his $44 billion takeover of the microblogging site will go to trial in October after a Delaware judge said yesterday that the social media company deserved a quick resolution of the deal’s uncertainty.
The ruling is a blow to Musk, who pushed for a trial in February, which his lawyer told the court would allow for an extensive investigation into the true number of spam accounts on the platform. Twitter had requested a September trial.
Chancellor Kathaleen McCormick of the Court of Chancery in Delaware said the parties were capable of handling an expedited trial.
“The reality is delay threatens irreparable harm to the sellers,” she said, referring to Twitter. She asked the parties to work out the schedule for the trial, which she set at five days.
According to Reuters, the Twitter stock rose throughout yesterday morning and was up 3.6 per cent at $39.81 in the early afternoon.
Twitter wants McCormick to declare that Musk breached the merger agreement and to order him to complete the merger at the agreed price of $54.20 per share. It said it needed the earliest possible trial date in case Musk was ordered to close and additional litigation was then needed to address financing.
Twitter’s lawyer, William Savitt, argued during the hearing that the number of the bot and spam accounts on its service had no bearing on its deal with Musk. He said Musk seized on the issue because he was seeking to “conjure an exit ramp for a deal that doesn’t have one.”
Musk had argued an expedited trial would prevent the truth about spam from coming to light.
A lawyer for Musk at yesterday’s hearing accused Twitter of dragging its feet in responding to Musk’s requests for information regarding methods for calculating the number of spam accounts.
“When Mr. Musk started asking questions, the answers he got were alarming,” said Andrew Rossman, Musk’s lawyer. He said it will take months to analyze massive amounts of data to resolve Musk’s questions about Twitter’s spam accounts.
Rossman also pushed back on the notion that Musk was trying to harm Twitter, pointing out the billionaire held a larger stake than the combined holdings of the directors of Twitter.
Report has it that even with this scheduling dispute, the stakes were high for Twitter. The company was already struggling to grow its user base and advertising business before Musk’s involvement, and now it and many other tech companies are pulling back on costs amid rampant inflation and fears of a recession.
Twitter needs a swift resolution to the battle with Musk in order to limit the uncertainty for its shareholders, employees and customers, and any fallout for its business that could be exacerbated by costly, prolonged litigation.
Although yesterday’s hearing was largely a procedural one, it offered a look at how each side may approach what is likely to be a messy litigation process. It may also provide a glimpse of how the judge overseeing the case is approaching the dispute.
“There may be hints from what she asks and what she says, and what they say, during the hearing that may tell us something,” said Carl Tobias, a professor at the University of Richmond School of Law.