California: Twitter scored an early win against Elon Musk in its fight to make him complete his $44 billion buyout, as a Delaware judge agreed to fast-track the case with an October trial date.
Chancery Court Chief Judge Kathaleen St. J. McCormick on Tuesday scheduled the trial for five days in the fall, instead of two weeks in February as the billionaire requested. Twitter argued it was suffering under the Tesla founder’s withdrawal from the deal and disparagement of the social media company.
The ruling marks the first victory for Twitter in a case in which many legal experts say Musk will be the underdog.
In a hearing in Wilmington, the judge made clear she saw little merit in Musk’s scheduling arguments, saying his lawyers “underestimate the ability of this court to quickly process” complex disputes in merger-and-acquisition cases.
McCormick found that the battle over the teetering transaction was “creating a cloud of uncertainty” over Twitter. “The reality is, continued delays threaten imminent harm” to the company, she said.
The judge had no questions for Twitter’s lawyer after his argument but did stop Musk’s attorney when he called the September 19 trial start Twitter proposed “preposterous.” She cited a past case that moved to trial within three months and rejected the Musk lawyer’s argument that she herself took a year to get another case to trial, noting the constraints of the pandemic at the time.
McCormick told the parties to propose specific October dates for the non-jury trial and wrapped up the hearing - held remotely to accommodate her own case of Covid - in just over an hour and a half.
Twitter shares jumped as much as 5.4 per cent after the ruling. They were trading at $39.32, up 2.4 per cent, at 3:16 p.m. in New York. From the day Musk tweeted that the deal was “on hold” in mid-May, the stock had fallen as much as 22 per cent. It hasn’t traded near the deal price of $54.20 a share since the first two weeks after the acquisition was announced.
In Tuesday’s hearing, a lawyer for Twitter argued that Musk was “contractually obligated to use his best efforts to close deal.” Instead, he is “doing the exact opposite,” attorney William Savitt told the judge. “He’s engaging in sabotage.”
Under the buyout agreement, Musk is obligated to finalize the deal within two days of all the closing conditions being met, Savitt said. Those conditions will be met in early September, he said.
“Mr. Musk has no intention of keeping any of his promises,” the lawyer said.