Tuesday, July 19, unveiled the next phase of the Elon Musk-Twitter saga. After becoming Twitter’s majority shareholder and agreeing to buy the social media platform back in April, Musk decided to walk away from the $44 billion deal. Twitter’s other shareholders were not happy about the news. As per Yahoo Finance, the billionaire might have to adhere to his commitment after all.
On July 11, Twitter sued Musk in Delaware Chancery Court for not following through with his offer to purchase the company. Twitter requested the trial be held in September, while Musk asked that it take place in February of 2023. Twitter’s request for the matter to be expedited stems from a “drop dead” date of October 24, meaning that either party can walk away from the deal if the dispute is not resolved by that date. On Tuesday, July 19, Chancellor Kathaleen McCormick ordered that both the concerned parties select five days in October for a trial.
Experts see this as an early win for Twitter due to McCormick’s acknowledgment of the time-sensitive nature of the case. Twitter argued that it could suffer “irreparable injury” if the matter isn’t settled quickly as its stocks are trading under a “cloud of uncertainty,” thanks to the doubt that Musk has created over the company’s future. Twitter has the lowest possible plaintiff burden by simply demonstrating a “colorable claim” that Musk fractured the merger. The lawsuit is based on specific performance, which places the responsibility on Elon Musk to complete the deal rather than pay monetary damages.
Since the world’s richest man announced his takeover offer, employees and board members at Twitter have been tiptoeing around the headquarters with uncertainty. Tesla stocks have also been on a roller coaster ride as Musk’s shares are part of the currency allocated to the purchase.
Musk tried to rescind his offer in June after claiming Twitter was not providing him with data detailing “bot accounts,” which generate spam and misinformation. Twitter has listed that these fake accounts make up for 5% of users in security filings, but Musk is challenging these numbers as he believes they are much higher. Twitter countered this argument by stating that Musk waived his right to the data they offered, and the language of the merger allowed them to deny Musk’s demands.
Chancellor McCormick demonstrated confidence that the conflict could be settled quickly. Yet, before granting Twitter’s request for a speedy trial, she stated that money alone would not be enough to resolve this high-stakes case.