Twitter won the case against Elon Musk for the first time | Business and economic news


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Twitter Inc. won an early victory over Elon Musk in its fight to force him to complete its $44 billion buyout as a Delaware judge agreed to speed up the case with an October trial date.

Chief Chancery Judge Catelyn St. Jay McCormick on Tuesday scheduled the trial for five days in the fall instead of two weeks in February, as requested by the billionaire. Twitter claimed to have been hurt by Tesla Inc founder’s refusal. from the deal and humiliation of a social media company.

The decision marks Twitter’s first victory in a case that many legal experts believe Musk will lose.

At the Wilmington hearing, the judge made it clear she didn’t see much value in Musk’s reasoning for the appointment, saying his lawyers “underestimate this court’s ability to deal quickly” with complex M&A disputes.

McCormick found that the battle over the volatile transaction “created a cloud of uncertainty” on Twitter. “The reality is that continued delays threaten the company with imminent harm,” she said.

The judge had no questions for Twitter’s lawyer after his dispute, but stopped Musk’s lawyer when he called Twitter’s proposed Sept. 19 start of the trial “absurd.” She cited a past case that went to court within three months and rejected Musk’s lawyer’s argument that it took her a year to take another case to court, noting the limitations of the pandemic at the time.

McCormick told the parties to propose specific October trial dates without a jury and completed the hearing, which was conducted remotely to account for her own Covid case, in just over an hour and a half.

Jumping on Twitter

Twitter shares jumped 5.4% after the court ruling. They traded at $39.32, up 2.4%, at 3:16 pm in New York. Since the day Musk tweeted that the deal was “postponed” in mid-May, the stock has fallen 22%. The deal price hasn’t come close to $54.20 per share since the first two weeks after the acquisition was announced.

San Francisco-based Twitter lawyers said they only need four days to prove that the world’s richest man must honor his agreement. Twitter filed a lawsuit last week to force Musk to complete the deal.

At Tuesday’s hearing, a lawyer for Twitter said Musk was “contractually obligated to make every effort to close the deal.” Instead, he “does the exact opposite,” attorney William Savitt told the judge. – He’s a saboteur.

Under the buyout agreement, Musk is required to complete the deal within two days of meeting all closing conditions, Savitt said. According to him, these conditions will be met in early September.

“Mr. Musk has no intention of keeping any of his promises,” the lawyer said.

‘Warp Rate’

Musk’s legal team said Twitter is unfairly pushing for “high-speed traffic” litigation. Musk said Twitter violated the terms of the buyout deal by not handing over details of so-called spambot accounts on its system. The case requires “forensic and big data analysis” on the bots, along with other legal issues, Musk’s lawyers said in a statement.

Andrew Rossman, Musk’s lawyer, said at the hearing that there was no need to rush the trial to meet the October deadline specified in the deal. The important date is the expiration of the financial obligations for the purchase, towards the end of April next year, he told the judge. The February trial will give the court enough time to decide the case and leave room for an appeal, Rossman said.

“The idea of ​​launching this business in 60 days” was “extraordinary,” he said of Twitter’s proposed schedule. “These are ridiculous timings.”

Rossman dismissed Twitter’s claim that Musk is trying to buy time for the financial commitment to expire. According to him, his client “continued to make every effort to close the deal”, building up funding and forcing his lawyers to keep in touch with Twitter on the details up to the day the company filed a lawsuit.

“Mr. Musk has no motivation to harm Twitter,” Rossman said, given that he is the second largest shareholder.

Quick Court

In the end, he failed to convince McCormick to deny Twitter an accelerated schedule.

Interrupting his argument, the judge pointed to a merger dispute in 2001 between chicken meat producers Tyson Foods Inc. and IBP Inc., which was taken to court within three months. The clerk’s judge in the case ordered Tyson to proceed with a $4.7 billion buyout of his competitor after he attempted to cancel the deal.

McCormick denied Rossman’s citation of a case she handled herself — an attempt by private equity firm Kohlberg to back out of its $550 million acquisition of cake supplier DecoPac Holdings from Snow Phipps Group LLC — before a year-long litigation. She noted that questions about the ransom arose just at the moment when the pandemic was gaining momentum. In what could have been an ominous omen for Musk, McCormick ordered Kohlberg to close the deal.

Chancery judges in Delaware, home to more than half of US public companies, are renowned for being able to navigate complex M&A disputes faster than many other US courts. Unlike some states, where it can take several years for a case to go to trial, the Delaware Court of Chancery usually moves faster, and cases are often discussed within five or six months of filing.

Twitter v. Musk, 22-0613, Delaware Court of Chancery (Wilmington).

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