Twitter-Musk takeover dispute heading for an October trial
Elon Musk lost a fight to delay Twitter’s lawsuit against him as a Delaware judge on Tuesday set an October trial, citing the “cloud of uncertainty” over the social media company after the billionaire backed out of a deal to buy it.
“Delay threatens irreparable harm,” said Chancellor Kathaleen St. Jude McCormick, the head judge of Delaware’s Court of Chancery, which handles many high-profile business disputes. “The longer the delay, the greater the risk.”
Twitter had asked for an expedited trial in September, while Musk’s team called for waiting until early next year because of the complexity of the case. McCormick said Musk’s team underestimated the Delaware court’s ability to “quickly process complex litigation.”
Twitter is trying to force the billionaire to make good on his April promise to buy the social media giant for $44 billion — and the company wants it to happen quickly because it says the ongoing dispute is harming its business.
Musk, the world’s richest man, pledged to pay $54.20 a share for Twitter, but now wants to back out of the agreement.
“It’s attempted sabotage. He’s doing his best to run Twitter down,” said attorney William Savitt, representing Twitter in Delaware’s Court of Chancery before the court’s Chancellor Kathaleen St. Jude McCormick. The hearing was held virtually after McCormick said she tested positive for COVID-19.
Musk has claimed the company has failed to provide adequate information about the number of fake, or “spam bot,” Twitter accounts, and that it has breached its obligations under the deal by firing top managers and laying off a significant number of employees.
Savitt said the contested merger agreement and Musk’s tweets disparaging the company were inflicting harm on the business and questioned Musk’s request for a delayed trial, asking “whether the real plan is to run out the clock.”
“He’s banking on wriggling out of the deal he signed,” Savitt said.
But the idea the Tesla CEO is trying to damage Twitter is “preposterous. He has no interest in damaging the company,” said Musk’s attorney Andrew Rossman, noting he is Twitter’s second largest shareholder with a far larger stake than the entire board.
Savitt emphasized the importance of an expedited trial starting in September for Twitter to be able to make important business decisions affecting everything from employee retention to relationships with suppliers and customers.
Rossman said more time is needed because it is “one of the largest take-private deals in history” involving a “company that has a massive amount of data that has to be analyzed. Billions of actions on their platform have to be analyzed.”
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