Twitter Sees First Win in Legal Case Against Elon Musk, as Musk Looks to Exit Twitter Takeover Deal

This probably doesn’t bode well for Elon Musk’s chances at wriggling out of his $44 billion Twitter takeover bid.

Today, Delaware’s Court of Chancery has ruled in Twitter’s favor for an expedited trial in the Musk acquisition case, with Musk and Co. given just five days to present their argument as to why Musk should be allowed to pull out of the deal. The case has been scheduled for October.

The Chancellor reportedly only needed 10 minutes to come to a decision.

Musk’s legal team had sought to extend the length of the trial, arguing that it needs more time to review the data required, and that Twitter is seeking to obfuscate its figures on fake and spam accounts by expediting the timeline, which Musk’s team says is the key reason for pulling out of the deal.

But in another potential blow for Musk’s chances, Chancellor Kathaleen McCormick said that addressing this element is not necessary, since “nothing in the merger agreement turns on that question.”

As reported by CNBC, Twitter’s lawyers argued that a quick trial is necessary ‘in order stop the ongoing harm Twitter has experienced from the uncertainty of the deal’s closure and alleged disparagement by Musk’.

Musk has been very vocal, and very public, in his criticism of the company, and its claim that only 5% of its active accounts are spam and/or bots. Musk has also criticized Twitter’s leadership, its prospects, its board – basically, Musk has been open in his disdain for the company, almost from the beginning of his takeover push.

Twitter says that Musk’s actions have violated the non-disparagement clause in the takeover agreement, and it seems inevitable that Twitter will eventually also argue that Musk has caused significant monetary harm to the company due to his attacks, which will be difficult for Twitter to fully recover from, whether Musk is forced to pay up or not.

Which is another key consideration. Right now, Twitter is almost in a lose-lose scenario – either it ends up in a worse market position, and it has to pick up the pieces as Musk exits the deal, or it winds up being owned by someone who clearly no longer wants it, which is an uncertain outcome in itself.

And if Musk is forced to buy it, what then? Will Musk be able to put aside the bitterness of the takeover dispute to then build Twitter into a significant, valuable business?

It’s pretty much a mess all around – and Twitter employees now have to deal with at least another three months of this, as they await the legal trial.

The human impacts, in this sense, are significant. And while speculation swirls around Musk’s real motivation for his decision to exit the bid, the bottom line increasingly seems to be that Musk will have to pay, with any attempts to either reduce the bid price, or side-step the contract terms, likely negated by Musk’s own public statements and comments.

Which Musk seems to believe will have little bearing – and for good reason, given that Musk has avoided responsibility for such in the past.

Back in 2019, Musk was sued for defamation after he leveled unfounded claims, via tweet, that a member of a cave rescue team working to save a group of trapped youngsters in Thailand was a ‘pedo guy’.

Musk’s legal team argued that, as Musk did not mention the victim by name within the offending tweet, that it was unclear whom exactly Musk was referring to, which negates the defamation claim. The court ultimately agreed, and that case seems to have emboldened Musk to say whatever he likes via tweet, knowing that he can probably find legal loopholes to disown such opinions in retrospect, by being careful in who he does and doesn’t refer to directly in his comments.

You can expect to see Musk’s legal team refer to this again in the upcoming Twitter trial, which likely explains by Musk’s tweets about the case remain fairly cryptic.

Either way, though, the outcome for Twitter is not good – while Twitter also knows that Musk is trying to extend the timeline for the trial, which could then complicate his financing for the deal, another potential out for the billionaire.

It’s a sad next stage for what once seemed to be a positive move for the app’s future, at least to some analysts and supporters. Many viewed Musk as a potential savior for the platform, with his genius to lead Twitter into a new phase of life.

Now, that seems like an afterthought. And when all the current board members and execs get paid as a result of the Musk deal, if it indeed does go through, what then?

Will Musk even be able to fix this, if he is forced to become Tweeter in chief?