Elon Musk had to buy Twitter for 44 billion US dollars.
Lawyers for Twitter and Elon Musk will face each other for the first time on Tuesday in a preliminary hearing in an unprecedented legal battle between the richest man in the world and the social network, determined to be redeemed by his defender.
The platform launched lawsuits a week ago against the boss of Tesla and SpaceX to force him to honor his commitment to acquire it for 44 billion of dollars.
Although she is going through an image crisis after months of attacks and denigration from her ex-suitor, she is the favorite.
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 Twitter victory.
By victory, the expert means a decision by the judge that would force Elon Musk to buy the Californian group at the price agreed at the end of April ($54.20 per share) or to pay damages and substantial interests.
The wealthy entrepreneur unilaterally broke the agreement on July 8, on the grounds that Twitter's board of directors allegedly failed to provide him with reliable information on the number of active fake accounts on the network.
The odds that he will get away with paying only the severance package ($1 billion) or he is declared in his right are considered very weak.
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 – has taken up the matter.
She is a very serious judge, who will not be intimidated by either party […] In the past, she has not been tender with those who show bad faith, remarks Adam Badawi, professor of law at the University of Berkeley.
In its complaint, Twitter accused Elon Musk of being hypocritical and in bad faith.
The company's attorneys believe it has changed its mind in the face of the recent drop in stock market valuations of technology companies.
After putting on quite a show to make Twitter a target, and after proposing and then signing a merger deal, Musk seems to believe he's free – unlike any party bound by a subsequent contract. Delaware law — to change your mind, defame the company, disrupt its business, destroy its stock value and wash your hands of it, they said.
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 around the world by politicians, celebrities, activists and influencers, seems to have little in common with that of organizations less seen.
However, it is not different enough, I think, for Delaware to risk its reputation by deciding not to implement the terms of the agreement, consider Adam Badawi.
Tuesday's hearing is set to address the date of a possible trial.
Twitter requested an accelerated procedure, starting in September, so as not to prolong the period of uncertainty which is partly paralyzing the company.
Elon Musk's lawyers filed an appeal on Friday to stop hostilities from opening until 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 court case.
But it would be rational reasoning, says Adam Badawi, referring to the unpredictability of Elon Musk, who acts like a free electron.
In another case tried in Delaware, Musk showed his willingness to go through with it, adds the professor. And he won. I don't think his instinct is necessarily to come to an arrangement.