Takeover: In the Twitter case against Elon Musk, the trial opens

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RedemptionIn the Twitter case against Elon Musk, the trial opens

On Tuesday, justice began to examine the complaint against Elon Musk, filed by Twitter, to force the billionaire to keep his buyout promises.

Elon Musk and Twitter are at loggerheads.

Reuters

The court battle Between Twitter and Elon Musk opened Tuesday with a first hearing, a week after the platform launched lawsuits against the boss of Tesla and SpaceX. The social network is asking a court specializing in business law to force the multi-billionaire to honor its commitment to acquire it for 44 billion dollars (some 42.6 billion francs).

Twitter wanted an accelerated procedure, from September, so as not to prolong the period of uncertainty which partially paralyzes the company. His lawyer, William Savitt, asked the judge to take into account the risk of damage to the Californian group if the procedure drags on.

Elon Musk’s lawyers had filed an appeal on Friday for hostilities not to be opened before next year. They assure that the experts will have to analyze “mountains of data” to prove, as the multi-billionaire asserts, that the platform is full of automated accounts and spam, well beyond the proportion of 5% officially indicated.

A “public square”

This is the reason that Elon Musk had given for unilaterally ending the agreement to take over the social network which he considers to be a “public place” essential to “democracy”. “This topic that Musk says will require a complex review is a fabricated problem, designed to complicate things and cause delays,” said William Savitt. “The merger agreement doesn’t even mention bots or spam,” he insisted.

“We suspect that Elon Musk wants to delay this trial long enough to never be held to account. (…) He knows that in such circumstances, justice delayed is often justice not done. This is even what he hopes for, ”he said.

“Twitter stock is in good shape”

Although she is going through an image crisis after months of attacks and denigration from her ex-suitor, the platform is the favorite in this showdown. “Twitter’s stock has been in good shape” since the complaint was filed, noted Wedbush Securities analyst Dan Ives. “It seems that many investors who read it concluded that this Game of Thrones showdown in the courts is going to end in a Twitter victory.”

By “victory”, the expert means a decision by the judge which would force Elon Musk to buy the company at the price agreed at the end of April (54.20 dollars per share) or to pay substantial damages. The chances that he will get away with paying only the termination indemnities (one billion dollars), or that he will be declared in his right, are considered to be very low.

Litigation depends on the Delaware Court of Chancery, a court in this small state in the eastern United States, specializing in business law. Its president Kathaleen McCormick – the first woman in this position – took up the matter. “She is a very serious judge, who will not be intimidated by either party. (…) In the past, she has not shown herself to be tender with those who show bad faith”, underlines Adam Badawi, professor of law at the University of Berkeley.

“Hypocrisy” and “bad faith”

In its complaint, Twitter accused Elon Musk of having shown “hypocrisy” and “bad faith”. Lawyers for the company believe he has changed his mind in the face of the recent drop in stock market valuations of technology companies. Kathaleen McCormick is best known for having forced Kohlberg, a company that had also tried to break off an engagement, to buy the company in question, DecoPac.

The fate of the bluebird, a social network used worldwide by politicians, celebrities, activists and influencers, seems to have little in common with that of less prominent organizations. But “it’s not different enough, I think, for Delaware to risk its reputation by deciding not to apply the terms of the agreement”, considers Adam Badawi.

The multibillionaire and the board of directors can still choose to agree on a slightly lower price and thus avoid the lawsuit. “But that would be rational reasoning,” remarks Adam Badawi, referring to the unpredictability of Elon Musk.

(AFP)

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