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Twitter, Musk square off in court over bid for fast-track trial
Global Banking & Finance Review®
Company
By Tom Hals
WILMINGTON, Del. (Reuters) -Twitter Inc’s showdown with Elon Musk over his $44 billion takeover faces its first test on Tuesday, when a judge will weigh the company’s bid for a fast-tracked trial which it says it needs to ensure deal financing does not come unraveled.
The hearing began at 11 a.m. EDT and was being conducted via Zoom because the judge, Chancellor Kathaleen McCormick of the Court of Chancery, tested positive for COVID-19, according to court documents.
The San Francisco-based company is seeking to resolve months of uncertainty for its business as Musk tries to walk away from the deal over what he says are Twitter’s “spam” accounts that he says are fundamental to its value.
Twitter has asked McCormick to find Musk breached the merger agreement and to order him to complete the merger at the agreed price of $54.20 per share.
Twitter wants an expedited trial in September because it said Musk is smearing Twitter and undermining operations by refusing to approve business initiatives, such as an employee retention plan.
The company said adopting Musk’s “slow walk” proposal for a 2023 trial leaves little time for additional litigation over deal financing if Musk is ordered to close. The deal financing expires in April.
Musk on Friday accused Twitter of seeking a “warp speed” trial to “railroad” him into buying the company.
Since agreeing in April to buy Twitter, Musk has questioned whether the company misled regulators about fake accounts and bots and said he has proposed a February trial to give him adequate time to investigate.
Twitter’s stock has slumped from above $50 a share when the deal was announced to as low as $32.55 last week.
It was trading around $39.16 on Tuesday morning, up about 2% and near the highest level since Musk said he was walking away.
Minor Myers, a professor at UConn School of Law, said he expected McCormick to adopt a trial schedule close to Twitter’s proposal.
“The longer it drags on, the more distraction for Twitter,” he said. “There’s more risk, more things that can go wrong.”
(Reporting by Tom Hals in Wilmington, Del. Additional reporting by Sheila Dang in DallasEditing by Noeleen Walder, Rosalba O’Brien and Matthew Lewis)
A merger agreement is a legal document that outlines the terms and conditions under which two companies agree to combine their operations into a single entity.
A fast-tracked trial is a legal proceeding that is expedited to resolve a case more quickly than the standard timeline, often due to the urgency of the matters involved.
Investment is the act of allocating resources, usually money, in order to generate income or profit, often through purchasing assets like stocks or real estate.
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