Blow to Elon Musk; Twitter lawsuit gets fast-tracked
In the Twitter Vs Elon Musk saga, the micro-blogging platform has won the first major battle against the billionaire by succeeding in persuading the court to start an early trial in the takeover deal case. The Delaware judge has ruled in favour of Twitter by choosing a trial date closer to the one proposed by it. The trial in the case will now start in October, not in February, which was requested by the billionaire.
Chancellor Kathaleen McCormick of the court ruled that as a public company, it's important for Twitter to solve the matter quickly. She ruled the more there's a delay in the trial, the more it'll harm the seller company (Twitter). The court has now asked both parties to schedule five days for the hearing in October.
This week, Tesla chief executive Elon Musk raised objections in his motion against Twitter on its plea for fast-tracking the trial over the billionaire's decision to end the takeover deal. Calling Twitter's request "unjustifiable", Musk requested the Delaware Chancery Court to delay it to February 2023.
Musk had said Twitter's sudden request for speeding the trials after two months of "foot-dragging" is its latest "tactic" to shroud the truth on spam accounts. Twitter, on the other hand, requested the court to initiate a hearing as early as September as its merger agreement with Musk ends on October 25, 2022.
Amid the court ruling, the Twitter share closed at $39.49, up 2.81% on the New York Stock Exchange. However, it's far below the agreed price of $54.20 per share as per the deal signed with Musk. In the past month, the Twitter share has risen 1.49%.
The Tesla share also jumped 2.07% to $736.59. The share has risen 3.58% in the past month.
On April 25, 2022, Musk, acting through and with his solely-owned entities, parent company X Holdings I, Inc. and acquisition subsidiary X Holdings II, Inc., agreed to buy Twitter for $54.20 per share in cash, for $44 billion.
That price, presented by Musk on a take-it-or-leave-it basis in an unsolicited public offer, represented a 38% premium over Twitter’s unaffected share price. Musk had personally committed $33.5 billion to fulfil the deal.
The latest controversy in the deal took a new turn on July 8 when Musk ended the $44-billion deal abruptly, accusing Twitter of failing to provide information on bot accounts. Twitter termed Musk’s purported termination of the deal "invalid and wrongful". The company said the merger agreement remains in effect.
Four days later, Twitter sued Musk in court to complete the merger deal. In a 62-page plea before the Delaware court, the microblogging platform says his requests for data on spam accounts were “never intended” to make progress toward consummating the merger but to force litigation to make information about Twitter public.
Twitter alleged that Musk’s conduct simply confirms he wants to escape the binding contract he freely signed and that he wants to damage Twitter in the process.
Twitter said the entire dynamics changed — as markets fell globally and the share of the company dropped significantly — after Musk signed the $44-billion deal on April 25, 2022. Even the value of his stake in his company Tesla, the anchor of his personal wealth, declined by over $100 billion from its November 2021 peak, says Twitter.