Let the battle begin. Tuesday, July 19, the lawyers of Twitter and Elon Musk will face each other for the first time during a preliminary hearing in an unprecedented legal battle between the richest man in the world and the social network, determined to redeemed by his defender.
On July 8, the boss of Tesla and SpaceX informed Twitter that he was terminating the agreement because of “false and misleading statements” by the company on the fake accounts. Twitter’s board of directors announced legal action to enforce the terms of the agreement.
A few days later, on July 12, arguing that Elon Musk’s strategy is “a model of hypocrisy” and “bad faith”, the platform initiated proceedings before a court specializing in business law. She wants to force the multi-billionaire to honor his commitment to acquire it for the modest sum of 44 billion dollars. And although she is going through an image crisis after months of attacks and denigration from her ex-suitor, she is the favorite.
A possible victory for Twitter
“Twitter’s stock has been in good shape” since the lawsuit was filed, noted analyst Dan Ives of Wedbush Securities. “It seems that many investors who have read it have concluded that this Game of Thrones showdown in the courts is going to end in a victory for Twitter. »
By “victory”, the expert means a decision of the judge which would force Elon Musk to buy the Californian group at the price agreed at the end of April (54.20 dollars per share) or to pay substantial damages.
But the chances that he will get out of it by paying only the indemnities for breaking the agreement (one billion dollars) or that he will be declared in his right are considered to be very low.
Elon Musk accused of acting in bad faith
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.
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.
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“After putting on quite a show to target Twitter, and after proposing and then signing a merger deal, Musk seems to believe he’s free, unlike any party bound by a contract under the law of the Delaware, to change its mind, defame the company, disrupt its business, destroy its stock value and wash your hands of it,” they said.
Two opposing strategies
Twitter asked for an accelerated procedure, from September, so as not to prolong the period of uncertainty which partially paralyzes the company. While Elon Musk’s lawyers 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 claims, that the platform is full of automated accounts and spam, well beyond the proportion of 5% officially indicated.
The judge should also take into account the deadlines of the financial package negotiated with banks and investors, so as not to compromise the possibility of a takeover. The businessman and the board can still choose to agree on a slightly lower price and thus avoid the lawsuit.
“But it would be rational reasoning,” said Adam Badawi, professor of law at the University of Berkeley in reference to the unpredictable character of Elon Musk, who acts as a “free electron”.