Twitter secures October trial against Elon Musk
Important takeaways
- Twitter has secured an October lawsuit against Elon Musk, canceling his plans to buy the company on July 8.
- Musk unsuccessfully sought a trial date in February, claiming his team needed time to review data from Twitter.
- Musk could face penalties of at least $1 billion if he does not go through with the deal, according to previous reports.
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Twitter received a lawsuit against Elon Musk in October, who recently canceled his plans to buy the social media company.
October test date
Elon Musk may not be walking away from Twitter so easily.
Musk announced on July 8 that he would cancel his planned acquisition of Twitter. In response, Twitter said it would continue to pursue the deal by taking legal action against Musk.
Now the court case that could force the agreement to continue is set for October. Chancellor Kathaleen McCormick, chief judge of the Delaware Court of Chancery, ruled in favor of Twitter today and granted the company a five-day fast-track trial.
Twitter’s lawyer — Bill Savitt of Wachtell, Lipton, Rosen & Katz — said a speedy trial is necessary to prevent damage. He added that Musk’s “continued uncertainty … is hurting Twitter, every hour of every day.”
Furthermore, a delayed trial can cause complications. The two firms have previously set a “drop-dead” date that would allow both parties to walk away if no deal is finalized by October 24, while Musk’s debt financing will expire on April 25, 2023.
Musk has wavered on the acquisition
Musk, for his part, unsuccessfully sought a February trial date. His legal team argued that an earlier date would leave little time to review the necessary information.
Musk and his lawyers plan to determine the proportion of Twitter accounts that are spambots or otherwise fraudulent.
This has been an issue since Musk backed out of the deal in May. At the time, Musk required proof that less than 5% of Twitter’s accounts were fake before proceeding with the deal.
The deal appeared to be finalized in June, when Twitter promised to provide a “firehose” of data and Musk began discussing his plans with employees. However, Musk found the provided data insufficient and indicated that he would cancel the deal on July 8.
Musk’s legal team also plans to oppose the current lawsuit, according to July 18 reports.
Twitter probably has the upper hand
Most comments on the case suggest that Twitter will succeed given Musk’s questionable behavior and poor legal grounding.
In fact, Twitter’s own lawyer has claimed that “nothing in the merger agreement turns on [the] questions” by spambots. Rather, Savitt says concerns about spambots are simply a cover for buyer’s remorse on Musk’s part.
If Twitter succeeds in the lawsuit, Musk will face at least $1 billion in penalties or have to proceed with the deal as planned.
If Musk goes through with the deal, he is expected to add cryptocurrency payments to Twitter and work to eliminate crypto fraud. Top crypto exchange Binance also supports the deal.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH and other cryptocurrencies.
