Chancery Court Chief Judge
The ruling marks the first victory for Twitter in a case in which many legal experts say Musk will be the
In a hearing in Wilmington, the judge made clear she saw little merit in Musk’s scheduling arguments, saying his lawyers “underestimate the ability of this court to quickly process” complex disputes in merger-and-acquisition cases.
McCormick found that the battle over the teetering transaction was “creating a cloud of uncertainty” over Twitter. “The reality is, continued delays threaten imminent harm” to the company, she said.
The judge had no questions for Twitter’s lawyer after his argument but did stop Musk’s attorney when he called the Sept. 19 trial start Twitter proposed “preposterous.” She cited a past case that moved to trial within three months and rejected the Musk lawyer’s argument that she herself took a year to get another case to trial, noting the constraints of the pandemic at the time.
McCormick told the parties to propose specific October dates for the non-jury trial and wrapped up the hearing -- held remotely to accommodate her own
Twitter shares jumped as much as 5.4% after the ruling. They were trading at $39.32, up 2.4%, at 3:16 p.m. in New York. From the day Musk tweeted that the deal was “on hold” in mid-May, the stock had fallen as much as 22%. It hasn’t traded near the deal price of $54.20 a share since the first two weeks after the acquisition was announced.
Lawyers for San Francisco-based Twitter had said they needed only
In Tuesday’s hearing, a lawyer for Twitter argued that Musk was “contractually obligated to use his best efforts to close deal.” Instead, he is “doing the exact opposite,” attorney
Under the buyout agreement, Musk is obligated to finalize the deal within two days of all the closing conditions being met, Savitt said. Those conditions will be met in early September, he said.
“Mr. Musk has no intention of keeping any of his promises,” the lawyer said.
Musk’s legal team has said Twitter was unfairly pushing for a
“The idea of running this case in 60 days” was “extraordinary,” he said of Twitter’s proposed schedule. “It’s a preposterous time frame.”
Rossman dismissed Twitter’s assertion that Musk is trying to run out the clock so the financing commitments lapse. His client “continued to use his best efforts to do the deal” by lining up financing and having his lawyers stay in communication with Twitter on the details right up to the day the company filed suit, he said.
“Mr. Musk has no motivation to harm Twitter,” given that he’s its second-largest shareholder, Rossman said.
In the end, he failed to persuade McCormick to deny Twitter an expedited schedule.
In interrupting his argument, the judge pointed to a 2001
McCormick rejected Rossman’s citation of a case she presided over herself -- private equity firm Kohlberg’s effort to walk away from a $550 million acquisition of cake supplier
Chancery judges in Delaware, the corporate home to more than half of U.S. public companies, are known for being able to parse legal thickets of complex merger-and-acquisition disputes more quickly than many other US courts. Unlike in some states where it can take several years to get a case to trial, Delaware Chancery Court generally moves quicker, with cases often argued within five or six months of being filed.
The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).
(Corrects that Kohlberg tried to walk away from deal in 20th paragraph of story published July 19)
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