Evercore ISI senior managing director Mark Mahaney discusses if the social media giant will be able to force Elon Musk to buy the company on ‘Varney & Co.’
Twitter and Elon Musk’s legal battle over the Tesla chief executive’s decision to terminate his $44 billion acquisition of the social media giant will take place in October, according to a judge’s ruling on Tuesday.
Twitter sued Musk on July 12, accusing the billionaire of refusing “to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.”
“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the lawsuit states.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TWTR | TWITTER INC. | 38.41 | +0.67 | +1.78% |
The company requested the trial be expedited to September because the merger agreement has a “drop dead” date of Oct. 24.
In a motion on Friday, Musk urged the court to reject Twitter’s “unjustifiable” request and push the trial date to Feb. 13, 2023, or later to give more time for an investigation to determine Twitter’s percentage of spam and fake accounts. Musk has disputed the company’s internal estimates that spam and fake accounts make up less than 5% of its users.
The trial will take place over the course of five days, longer than the four days Twitter had requested but shorter than the two weeks Musk had requested.
ELON MUSK TO COUNTERSUE TWITTER TO BLOW UP DEAL: REPORT
Chancellor Kathaleen McCormick of the Court of Chancery in Delaware said the parties were capable of handling an expedited trial and as a public company Twitter deserved to have the cloud hanging over it resolved quickly.
“The reality is delay threatens irreparable harm to the sellers,” she said, referring to Twitter.
Twitter’s lawyer William Savitt argued during Tuesday’s hearing that the number of bot and spam accounts on its service had no bearing on its deal with Musk. He said Musk seized on the issue because he was seeking to “conjure an exit ramp for a deal that doesn’t have one.”
A lawyer for Musk accused Twitter of dragging its feet in responding to Musk’s requests for information regarding the methods for calculating the number of spam accounts.
“When Mr. Musk started asking questions, the answers he got were alarming,” Musk’s lawyer Andrew Rossman said. Rossman added that it will take months to analyze massive amounts of data to resolve Musk’s questions about Twitter’s spam accounts.
Rossman also pushed back on the notion that Musk was trying to harm Twitter, pointing out the billionaire held a larger stake than the combined holdings of the directors of Twitter.
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Under the agreement reached in April, Musk pledged to purchase and take Twitter private at $54.20 per share.
Musk has committed $33.5 billion in equity financing for the deal. The remainder will be paid through a debt financing package committed by banks, which expires on April 25, 2023.
Twitter shares are down approximately 6% year to date.
Reuters contributed to this report
