The scope of a trial of this level goes beyond being a media issue, because according to Robert Miller, a law professor with extensive experience in mergers, Elon Musk could have fateful scenarios: from paying the 44,000 million dollars agreed, to go to jail or lose your shares in Tesla.
After the date on which the trial between Elon Musk vs Twitter was made public, the businessman countersued the company, intensifying the case, however, more moments of tension could come between the leader of Tesla and the social network.
The announcement of the purchase of Twitter
The first thing Musk did was a minor purchase of 9.2% of shares of the social network at the beginning of April and days later the rumors of a larger purchase began, first it was mentioned that it would be a possible acquisition for 43,000 million dollars, however the The offer made by the businessman was for 44,000 million dollars.
Bret Taylor, independent chairman of Twitter’s board of directors, noted that they undertook “a thoughtful and comprehensive process to evaluate Elon’s proposal with a deliberate focus on value, certainty and funding. The proposed transaction will generate a premium of substantial effect and we believe it is the best way forward for Twitter shareholders.”
The definitive agreement to acquire Twitter was for $54.20 per share in cash. Once this operation was completed, the social network would become a private company, however it did not happen.
Elon Musk vs bots de Twitter
Tesla’s leading businessman said after the purchase that the transaction “cannot move forward” until Twitter proved the accuracy of its estimate of fake accounts, which the social network indicated was 5%.
The businessman considered that the figure is inaccurate and even mentioned that false accounts could represent more than 20% of the 229 million monetizable daily active users.
“20% of accounts are fake/spam, four times what Twitter claims and could be much higher. My offer was based on Twitter’s Securities and Exchange Commission (SEC) filings being accurate. Twitter’s CEO publicly refused to show proof of (which are) less than 5%. This deal cannot move forward until he does,” Musk wrote on his account, .
These comments are similar to those he made during a technology conference in Miami, where he estimated the figure that bots represent at least 20% of users of the social network. “Currently, what I am being told is that there is simply no way of knowing the number of bots,” he said.
For its part, Twitter made several efforts to make Musk more clear about the bots on the platform. One of these efforts was access to the “firehose” API, a space where each published tweet is analyzed through parameters such as user devices or the accounts they post.
The firehose API is one of the company’s most reserved resources, due to its value for ad targeting. In fact, it is used for the licensing business, with social media monitoring companies, and does not contain sensitive user data that is not public.
Firehose gives access to a large volume of data, making it impossible to analyze without automation, and this process could take a long time. However, the fact of sharing them with Musk was intended to calm the businessman’s concerns and ensure that he complies with the initial agreement, something that in the end did not happen.
Musk cancels Twitter purchase
In July, Musk alleged that the social media company had not met its contractual obligations, according to a statement filed with the United States Securities and Exchange Commission, for which he had reconsidered the transaction and preferred to cancel the deal.
The businessman’s agreement with Twitter included a provision according to which, if he failed, he would have to pay 1,000 million dollars, in addition to having legal action, something that the social network pushed.
“We are committed to closing the transaction at the price and terms agreed with Mr. Musk and plan to take legal action to enforce the merger agreement. We are confident that we will prevail in the Delaware Chancery Court,” the company announced in a press release.
After this controversy, the leader of Tesla made fun of the social network. After a few days, Twitter managed to define the trial date, which is scheduled for October 17.
The decision was determined by Delaware Chancery Court Judge Kathaleen St. J. McCormick after the judge set a 90-minute first hearing for July 19.
Trial and countersuit in the Twitter-Musk case
The trial will last 5 days from October 17 and may have various effects. Bret Taylor, chairman of Twitter’s board of directors, said he planned to take legal action to enforce the merger agreement. “Twitter’s board of directors is committed to closing the transaction at the price and terms agreed with Mr. Musk,” he wrote.
Twitter alleges that the businessman, from the beginning, has been “not serious” with the purchase of the social network. Part of his defense is a 62-page document containing numerous memes and tweets supporting his argument. It even highlights a poop emoji Musk tweeted when the social network posted his complaint to the Delaware chancery.
Judges on the Delaware Court of Chancery represent most publicly traded companies in the US. For this reason, it has been ruled that the resolution of the Musk-Twitter case be in this venue, in order to define the case more quickly and analyze it.
Unlike some states, where it can take several years for a case to go to trial, Delaware tends to move faster and trials can be resolved in five to six months.
After the date on which the trial between Elon Musk and Twitter will begin was made public, the businessman countersued the company, but asked the court that the lawsuit not be open to the public.
Possible scenarios for Musk, after Twitter lawsuit
According to Robert Miller, who is a law professor in addition to having experience in acquisition cases and law related to the Delaware chancery court, the billionaire has potential risks if he does not comply with the purchase agreement, such as losing the power of Tesla.
And it is that the specialist explained that the powers of the court can range from formally declaring the businessman “in contempt” or even taking control of his shares in his electric car company, where most of his wealth is concentrated.
He also explained that the court can order Musk to acquire Twitter for the $44 billion or other approved amount, as well as force him to pay an additional fine.