This is the appointment not to be missed: Twitter v. Elon Musk.
After three months of a campaign marked by theatrics and public shouting matches, the showdown between the richest man in the world and one of the social networks shaping public opinion finally has a date.
The trial between the two parties will open on Oct. 17 and last until Oct. 21, so decided the Delaware judge who is presiding over the case, Chancellor Kathaleen St. J. McCormick, according to court filings.
Everything should be resolved at this trial unless there is an agreement between the two camps.
This expedited trial comes after Musk decided to withdraw his offer of $44 billion, at $54.20 per share, to buy Twitter (TWTR), which he described as the de facto public town square of our time. The reason for withdrawing given by the CEO of Tesla (TSLA) is that the management of Twitter does not tell the truth about the number of spam bots, or fake accounts, existing on the platform.
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Oct. 24 Deadline to Close the Sale
Twitter has consistently stated in filings with the U.S Securities and Exchange Commission that approximately 5% of its total number of users are fake accounts. But Musk believes it's more than that. The only problem is that the billionaire had himself recognized that this is not a new problem. One of the reasons he gave for acquiring Twitter was to solve this problem. In addition, Musk himself had waived due diligence.
Days after the tech tycoon pulled out, Twitter took to court asking them to force Musk to honor his original commitments to buy the company. The platform was asking for a fast-track trial because a clause in the deal with Musk says that if the deal doesn't close by Oct. 24, either party is free to end the deal without penalty.
"Defendants’ ability to terminate the agreement before the presumptive drop-dead date of Oct. 24, 2022, is extremely limited and carefully circumscribed," Twitter said in its lawsuit. [You can find it here.].
"There is no right for defendants to terminate unless there is a breach sufficiently significant to cause failure of a closing condition, which, after due notice, is either incapable of being cured or is not cured within 30 days after such notice."
"Twitter has suffered and will continue to suffer irreparable harm as a result of defendants’ breaches," the platform alleged.
Musk had asked the judge, through his lawyers, for a trial to be held from February 2023 at the earliest.
"Plaintiff’s proposed schedule would severely prejudice defendants by depriving them of a meaningful opportunity to take discovery, conduct expert analysis, and present their case," lawyers for the billionaire wrote in their motion. [You can read it here.]
"The only relevant date is the outside date for the debt financing, April 25, 2023. Accordingly, defendants respectfully request trial on or after February 13, 2023, an extremely rapid schedule for a case of this enormous magnitude that provides the court time for reasoned adjudication before the true outside date," they argued.
But the judge had leaned in the direction of Twitter. The trial will therefore be held over five days and well before Oct. 24.
Important Deadlines
The judge also gave deadlines to the two parties before the trial. Aug. 1 before 5:00 p.m. ET is "deadline for serving initial discovery requests on third parties," while "deadline to serve final request for production of documents and final interrogatories, permitted for good cause only" is set for Aug. 12 at 12 p.m. ET.
"The parties shall meet and confer promptly regarding a confidentiality agreement, and a discovery plan including search terms, custodians, the form of production of electronically stored information, the form and content of privilege logs, and arrangements for any discovery to be taken from the parties’ agents and advisors," advised McCormick.
She added that: "The parties shall cooperate in good faith regarding arrangements for any discovery taken from a party’s agents, advisors, or other third parties, including depositions."
This point is important because Musk's lawyers have accused Twitter of not wanting to provide documents. The billionaire has accused the platform "of "resisting and thwarting” his right to information.
The battle between Musk and Twitter will have consequences in business circles, say experts. The outcome could indeed impact mergers and acquisitions, in particular the possibility for a potential buyer to end a transaction when they wish, as is the case in this case with Musk.
