Twitter sees its first victory in the case against Elon Musk | Business and Economy News

Twitter Inc. won a quick victory over Elon Musk in its fight to get him to complete its $44 billion takeover, as a Delaware judge agreed to expedite the case with an October trial date.

Chancery Court Chief Justice Kathaleen St. J. McCormick scheduled the trial for five days in the fall on Tuesday, instead of two weeks in February, as the billionaire had requested. Twitter argued that it suffered from the Tesla Inc. founder’s withdrawal from the deal and the social media company’s bashing.

The move marks Twitter’s first victory in a case in which many legal experts say Musk will be the underdog.

During a hearing in Wilmington, the judge made it clear she saw little merit in Musk’s planning arguments, saying his lawyers “underestimate the ability of this court to deal quickly” with complex disputes in the merger and acquisition business.

McCormick said the battle over the faltering deal “created a cloud of uncertainty” on Twitter. “The reality is that the continued delays threaten to cause imminent harm” to the company, she said.

The judge asked no questions of Twitter’s attorney after his closing argument, but stopped Musk’s attorney when he called Twitter’s proposed Sept. 19 trial start “absurd.” She cited an earlier case that went to trial within three months and dismissed Musk’s lawyer’s argument that she herself had taken a year to get another case tried, noting the constraints of the pandemic on the ‘era.

McCormick told the parties to come up with specific October dates for the non-jury trial and concluded the hearing – held remotely to accommodate his own Covid case – in just over an hour and a half.

Jumps to Twitter

Twitter shares jumped 5.4% after the decision. They were trading at $39.32, up 2.4%, at 3:16 p.m. in New York. Since the day Musk tweeted that the deal was “on hold” in mid-May, the stock had fallen 22%. It hasn’t traded near the transaction price of $54.20 per share for the first two weeks after the acquisition was announced.

Lawyers for San Francisco-based Twitter said they only needed four days to prove the world’s richest person had to honor his deal. Twitter filed a lawsuit last week to force Musk to close the deal.

During Tuesday’s hearing, a Twitter attorney argued that Musk was “contractually obligated to do his best to complete the deal.” Instead, he “does the exact opposite,” attorney William Savitt told the judge. “He is engaging in sabotage.”

Under the takeover agreement, Musk is required to finalize the deal within two days of meeting all closing conditions, Savitt said. These conditions will be met in early September, he said.

“Mr. Musk has no intention of delivering on any of his promises,” the attorney said.

‘Lightning speed’

Musk’s legal team said Twitter was unfairly pushing for a “warp speed” lawsuit. Musk said Twitter violated the terms of the takeover agreement by not providing detailed information about the so-called spam bot accounts in its system. The case requires “forensic examination and analysis of large amounts of data” on the robots as well as other legal issues, Musk’s attorneys said in the filing.

Andrew Rossman, a lawyer for Musk, argued during the hearing that there was no need to rush a trial to meet the October deadline specified in the agreement. The important date is when financing commitments for the purchase expire, around the end of April next year, he told the judge. A trial in February would give the court enough time to decide the case and leave room for an appeal, Rossman said.

“The idea of ​​handling this case in 60 days” was “amazing,” he said of Twitter’s proposed timeline. “It’s an absurd delay.”

Rossman dismissed Twitter’s claim that Musk is trying to run out of time so that funding commitments lapse. His client “continued to do his best to get the deal done” by lining up the financing and having his attorneys stay in touch with Twitter on the details until the day the company filed a lawsuit, did he declare.

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

fast yard

In the end, he was unable to persuade McCormick to deny Twitter an accelerated timeline.

Interrupting his argument, the judge pointed to a 2001 merger battle between chicken processors Tyson Foods Inc. and IBP Inc. that went to trial within three months. The chancery judge in that case ordered Tyson to proceed with the $4.7 billion buyout of his rival after he tried to call off the deal.

McCormick rejected Rossman’s citation of a case she chaired herself – efforts by private equity firm Kohlberg to exit a $550 million acquisition of cake supplier DecoPac Holdings from Snow. Phipps Group LLC – which took a year to go to trial. Questions arose about the takeover just as the pandemic was gaining traction, she noted. In what could be an ominous foreshadowing for Musk, McCormick ordered Kohlberg to close the deal.

Chancery judges in Delaware, the headquarters of more than half of America’s public companies, are known to be able to analyze the legal thickets of complex merger and acquisition litigation faster than many other US courts. Unlike some states where it can take several years for a case to go to trial, the Delaware Chancery Court generally moves faster, with cases often being argued within five or six months of being filed.

The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).

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