Elon Musk loses the first round. A US judge on Tuesday set the start of Twitter’s trial once morest the Tesla boss in October for five days, granting the social network’s request for a quick procedure. The platform launched lawsuits once morest Elon Musk last week, to force him to honor his commitment to acquire it for 44 billion dollars.
Elon Musk’s Lawyers filed on Friday a remedy so that hostilities do not begin before next year. They assure that the experts will have to analyze “mountains of data” to prove, as the multi-billionaire claims, that the platform is full of automated accounts and spam, well beyond the proportion of 5% officially indicated.
This is the reason Elon Musk gave for terminate unilaterally to the takeover agreement of the social network which he considers to be a “public place” essential to “democracy”.
Risk of “irreparable damage”
Twitter had requested an accelerated procedure, from September, so as not to prolong the period of uncertainty which partially paralyzes the company. Judge Kathaleen McCormick, president of a court specializing in business law in Delaware (northeast), acknowledged that “delays risked causing irreparable damage to Twitter”. She also mentioned that it was not certain that the payment of damages from Elon Musk would be enough to repair the harm suffered.
Although she is going through an image crisis following months of attacks and denigration from her ex-suitor, the platform is the favorite in this showdown. The takeover agreement made no mention of “bots”, and Elon Musk had waived financial checks in order to speed up the procedure.
Forced redemption or indemnities
“Twitter’s stock has been in good shape” since the complaint was filed, noted Wedbush Securities analyst Dan Ives, with a 20% rise in one week, which values Twitter at $ 30 billion, still far from the 44 billion promised by Elon Musk. “It seems that many investors who have read it have concluded that this Game of Thrones showdown in the courts is going to end in a victory for Twitter. »
By “victory”, the expert means a decision by the judge which would force Elon Musk to buy the company at the price agreed at the end of April (54.20 dollars per share) or to pay substantial damages. The chances that he will get away with paying only the termination indemnities (one billion dollars), or that he will be declared in his right, are considered to be very low.
Litigation depends on the Delaware Court of Chancery, whose president Kathaleen McCormick – the first woman in this position – took up the case. “She is a very serious judge, who will not be intimidated by either party. (…) In the past, she has not been tender with those who show bad faith, ”underlines Adam Badawi, professor of law at the University of Berkeley. Kathaleen McCormick is best known for having forced Kohlberg, a company that had also tried to break off an engagement, to buy the company in question, DecoPac.
If war is officially declared, the multi-billionaire and the company’s board of directors can at any time choose to agree on a slightly lower price and thus avoid the lawsuit.