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Tuesday was the first opportunity for Twitter and Elon Musk’s lawyers to argue their respective positions in court about whether the billionaire Tesla CEO should be required to complete the $44 billion purchase of the social media giant.
The Tuesday’s subject of Tuesday’s hearing is how soon the matter will go to trial. Twitter also filed a motion to expedite court proceedings and asked for a four-day trial in September when it filed the lawsuit last week, days after Musk attempted to terminate the arrangement. The request is being opposed by Musk’s legal counsel.
At the beginning of the hearing, Musk’s main defense attorney for Twitter, William Savitt, attacked him while pleading for a quick trial. According to Savitt, Twitter suffers harm “every day, every hour, and every day” due to the firm’s ongoing uncertainty due to the unfinished acquisition and legal action. He also cited what he perceived as Musk’s ongoing criticism of Twitter, including on Twitter’s own platform.
The stakes are very high for Twitter, even with one scheduling issue. Before Musk’s involvement, the company was already having trouble expanding its user base and advertising business. Now, it and many other internet companies are cutting costs due to high inflation and worries about a recession. To minimize the uncertainty for its shareholders, staff, and customers, as well as any commercial repercussions that could be worsened by expensive, protracted litigation, Twitter needs a quick resolution to the conflict with Musk.
Although Tuesday’s meeting is primarily procedural, it could provide a glimpse into how each party will approach what is expected to be a convoluted legal process. It might also give an insight into the strategy being used by the judge presiding over the case, Kathaleen St. Jude McCormick of the Delaware Court of Chancery.
The case has already encountered a minor obstacle: Although the hearing was originally planned to occur in person, McCormick informed the two parties in a letter that she had tested positive for COVID-19 and would be switching the hearing to Zoom on Monday.
Musk made the decision to end the accord less than three months after the historic acquisition deal was signed. He said Twitter broke the terms of the agreement by lying about the quantity of bot and spam accounts it allows on its network and by allegedly withholding information Musk claims is necessary to assess the scope of the problem.
Last Monday, Twitter responded with a 60-plus page complaint in which it claimed Musk was the one who had broken the terms. As a result of the market slump that has caused Twitter shares as well as Tesla (TSLA) shares, which the billionaire is counting on in part to finance the transaction, to tank, Twitter claimed Musk is using bots as a pretext to try to exit a deal over which he now has buyer’s remorse.
Twitter wants the Sale to go on
Twitter urged the court to order Musk to finalize the acquisition of the business. Although many legal experts believe Twitter has the stronger case, others also believe the firm may end up reaching a settlement with the billionaire if the lawsuit begins to draw out in an effort to minimize the disruption to its operations.
Read Also: Twitter Sues Elon Musk for Backing Out of $44bn Takeover Deal
Twitter and Musk appear to disagree greatly over whether to have a swift trial, as they do with the issue in general. However, Twitter stated in its motion that the expedition is required to “protect Twitter and its stockholders from the continuing market risk and operational harm resulting from Musk’s attempt to bully his way out of an airtight merger agreement” and to “ensure the deal can be completed before the “drop dead” date of October 24 that the two sides previously agreed to close the deal by.”
Twitter is still making the required preparations to move forward with the acquisition in the meantime. According to a regulatory filing, the business on Friday sent a letter to shareholders inviting them to vote on the agreement to sell Twitter to Musk for $54.20 per outstanding share at a special meeting later this year. The board of Twitter had unanimously recommended that shareholders approve the transaction, and it restated that view in the letter.
Despite Musk’s attempt to scrap the agreement, the Friday letter declares that “we are committed to finalizing the merger on the price and terms agreed upon with Mr. Musk.” Our ability to consummate the merger depends on your vote at the special meeting.
