Twitter and Elon Musk were ordered Tuesday to trial in October over whether the Tesla chief can be forced to complete his $44 billion deal to buy the social network, an early win for the uncertainty-wracked platform.
A judge in the eastern US state of Delaware ruled against Musk’s push for a February date, while hewing closely to Twitter’s desire for an expedited schedule.
Billions of dollars are at stake, but so is the future of the platform that Musk has said should allow any legal speech, an absolutist position that has sparked fears the network could be used to incite violence.
“We urge the court to enter a prompt schedule and give multiple grounds for that,” Twitter lawyer William Savitt argued, noting “the continued uncertainty caused by Musk’s purported termination inflicts harm on Twitter every day, every hour of every day.”
Musk’s team had argued fiercely against an expedited trial date, saying Twitter’s preferred date in September was simple too fast for such a complex matter.
The judge did not set an exact date, leaving it to the parties to converge on the timing.
Twitter lawyers noted the deal is supposed to close toward the end of October, just six months after Musk launched an unsolicited bid that the company’s board first resisted but then supported.
The world’s richest person has backed away from the deal in recent months as tech stocks have tumbled, and Twitter’s value has fallen well below the $54.20 per share he offered.
– Musk willingness to fight –
Rather than Silicon Valley, where Twitter is based, the company has lodged its lawsuit against Musk in Delaware.
The firm is incorporated in the tiny state like scores of other companies, and the case will be heard in the Delaware Chancery Court, which has deep experience in business disputes.
“The Chancery Court, which handles most of these matters, is very expert in corporate law, and more particularly, mergers and acquisitions. So this is the place to go,” said Carl Tobias, a University of Richmond law professor.
Kathaleen McCormick, the judge overseeing the case, comes with a no-nonsense reputation.
She also reportedly has the distinction of previously ordering a reluctant buyer into completing a corporate merger.
A forced closing of the Twitter deal is a scenario that some analysts consider possible.
“(Wall) Street and legal experts across the board view Twitter as having a ‘strong iron fist upper hand,’ heading into the Delaware court battle after months of this fiasco and nightmare,” analyst Dan Ives wrote last week.
He also noted that less likely options include Musk paying a $1 billion breakup fee and being able to walk away, or winning outright on his fake-account argument.
After pausing the deal in May, Musk’s lawyers announced in July he was “terminating” the agreement because of skepticism over Twitter’s false or spam accounts tally and allegations the firm was not forthcoming with details.
Tuesday’s hearing will be just the first step in what could be a lengthy legal fight that could end in a trial, but also a settlement.
“Musk has shown his willingness to take things all the way to the end in Delaware court,” said Adam Badawi, a University of California at Berkeley law professor.
“I think settling is not necessarily his instinct.”