It’s a battle of titans that will have important consequences for mergers and acquisitions in the future.
The world’s richest man and CEO of Tesla (TSLA) – Get Tesla Inc. Report abruptly withdrew his $44 billion bid to acquire the microblogging website he defines as the Town Square of our time. Twitter took legal action to get Musk to honor his commitment. It is therefore no surprise that the two adversaries are bringing out heavy artillery to destabilize the other. The battle is primarily mental. They must send messages to the opponent to show them that they are ready to do anything to inflict blows that would prevent them from getting up.
It was Twitter that struck the first blow by filing its lawsuit on July 12, just three days after Musk’s withdrawal, in Delaware Chancery Court. And in this document, the platform used the whimsical entrepreneur’s own tweets. The icing on the cake, the social network is asking justice for a quick trial.
The platform requests that the trial be held in mid-September because the merger agreement between the two parties provides that if it is not finalized before October 24, each of the two parties can terminate it free of charge.
“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 that you can find 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 didn’t respond right away. The billionaire let a few days pass and has just gone on the counterattack. In their response to Twitter’s complaint, Musk’s attorneys are asking that the trial not be held until Feb. 13, 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 of the billionaire wrote in their motion that you can read in its entirety here.
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“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.
In his letter withdrawing his proposed acquisition of Twitter, Musk accused the management of the social network of having lied about the number of spam bots or fake accounts present on the platform. Twitter has always estimated that fake accounts represent less than 5% of its users. Musk estimates that figure to be at least 20%.
“The core dispute over false and spam accounts is fundamental to Twitter’s value. It is also extremely fact and expert intensive, requiring substantial time for discovery. Twitter is a social media platform whose self-professed key performance metric is monetizable daily active users (“mDAU”),” Musk’s team said in their 16-page motion filed on July 15.
“Extreme expedition is also unwarranted because any exigency stems from plaintiff’s strategic delay,” the billionaire’s team said. “Had Twitter either promptly complied with its contractual obligations or informed defendants that it would not, this dispute would have ripened in early May.”
“Plaintiff’s attempt to impose “the burdens of expedited proceedings upon the defendants and the court cannot be reconciled with [its] failure to proceed with alacrity.”
A hearing is scheduled before a judge on July 19. This hearing will decide when the trial will be held.
On a more relaxed note, the mogul feels that Twitter lacks humor.
“With the sense of humor of a bot, Twitter claims that Musk is damaging the company with tweets like a Chuck Norris meme and a poop emoji. Twitter ignores that Musk is its second largest shareholder with a far greater economic stake than the entire Twitter board,” Musk’s lawyers said.