File photo. Elon Musk’s Twitter profile is seen on a smartphone placed on printed Twitter logos in this picture illustration taken Apr 28, 2022. (Photo: Reuters/Dado Ruvic)
WILMINGTON: Twitter’s showdown with Elon Musk over his US$44 billion takeover faces its first test on Tuesday (Jul 19), 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 11am EDT (11pm, Singapore time) 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 US$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 US$50 a share when the deal was announced to as low as US$32.55 last week.
It was trading around US$39.16 on Tuesday morning, up about 2 per cent 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.”