Elon Musk said in a text message to one of his Morgan Stanley bankers on May 8 that he was considering terminating the Twitter deal because of the potential of World War III, two weeks after he committed to purchasing Twitter for $44 billion.
“Let’s take a few days to relax. Tomorrow’s speech by Putin is quite significant. If World War III breaks out, buying Twitter won’t make any sense “Michael Grimes, head of global technology investment banking at Morgan Stanley, received a letter from Musk. According to many news sources, Twitter attorney Bill Savitt read the letter aloud at a court hearing yesterday. Vladimir Putin, the president of Russia, justified his invasion of Ukraine in his address on May 9. Two months prior to Musk’s agreement to purchase Twitter on April 25, the invasion started in February.
Twitter referred to the Musk text as a “Alex Spiro, a lawyer for Musk, said that the court’s description of the communications was “complete nonsense as the whole text chain demonstrates.” Next week, the whole text chain is anticipated to be put on the court’s docket “businessinsider.com said. The Wall Street Journal said that Spiro also “responded by stating that any businessman would be apprehensive about the implications of a future conflict on the stock market.”
The value of Musk’s ownership in Tesla, the foundation of his personal fortune, has decreased by more than $100 billion from its November 2021 high, according to Twitter’s complaint against Musk, which claimed that he had no right to withdraw from the agreement. According to the complaint, Musk agreed to seller-friendly conditions with “no funding contingency and no diligence requirement.”
Judge: Musk can’t postpone the trial
During a pre-trial hearing in the Delaware Court of Chancery, the letter from Musk to Grimes was read, perhaps providing a sneak peek of the points to be made in the trial planned to start on October 17. More immediately, Musk’s desire to alter his countersuit to incorporate whistleblower claims made by Twitter’s former security head and Twitter’s plea to postpone the trial by a month were contested by Twitter and Musk’s attorneys.
In a decision issued today, Judge Kathaleen McCormick answered both queries, refusing Musk’s request for a postponement but allowing him to modify the countersuit.
Musk had maintained that a delay of at least four weeks wouldn’t harm Twitter since the loan financing had an outside date of April 25, 2023 and the merger agreement’s “termination date of October 24, 2022 is automatically delayed if litigation is filed.” In her order today dismissing Musk’s plea for a postponement until mid-November, McCormick cited her earlier decision in which Musk had unsuccessfully sought to postpone the trial until February 2023.
Additionally, McCormick said, “In keeping the case timeline, I am reassured by Twitter’s representation that it can manage reasonable requests for extra discovery while retaining the October 17 trial date.
Musk can amend countersuit
Musk may use claims from a whistleblower lawsuit filed by former Twitter security head Peiter Zatko in his countersuit against Twitter, McCormick ruled.
According to McCormick, “the recently publicized Whistleblower Complaint would be reasons to authorize a modification under the low threshold of [Court of Chancery] Rule 15(a) in most cases.” “Twitter contends that the modification would be pointless, but their justifications fall short in light of Rule 15’s extraordinarily movant-friendly threshold (a). At this point, before the counterclaims have been completely litigated, I am hesitant to say more about the merits of them. The post-trial verdict must be patiently awaited by the whole globe.”
Allowing Musk to modify his countersuit, according to Twitter, “would be detrimental to the degree it would broaden discovery and delay the case timetable, and Twitter’s reasons to this effect are substantially more compelling than Twitter’s futility arguments,” McCormick said. “However, such prejudice may be lessened by keeping the current case timeline and limiting extra discovery to the new accusations. I will do it, then.”
In light of this, McCormick said that Musk is “permitted only incremental discovery related to the new charges,” which “may be undertaken via focused document discovery and limited additional experts and fact witnesses.” Twitter has allegedly been too sluggish in supplying information for discovery, according to Musk’s side during yesterday’s session.
Musk and Twitter discuss whistleblower allegations
According to Zatko’s complaint, which was sent to multiple federal agencies and members of Congress, Twitter has serious security issues and has lied to Elon Musk about bots. Although Twitter has said that fewer than 5% of its monetizable daily active users (mDAU) are spam or false, Zatko’s lawsuit doesn’t seem to refute that claim. Zatko relies on counting spam bots that aren’t included in the mDAU figure to argue against Musk’s assertion that Twitter’s estimate of spam is inaccurate.
According to a Wall Street Journal article that detailed yesterday’s three and a half-hour hearing, Twitter’s attorney “described Zatko as a disgruntled former employee with an ax to grind” and “said Mr. Zatko’s work at the company wasn’t related to the alleged undercounting of spam and bot accounts that Mr. Musk cited in his counterclaims.”
According to the WSJ, Spiro “chastised Twitter for not disclosing what it knew about Mr. Zatko’s accusations of ‘egregious deficiencies’ related to privacy and digital security, among other alleged mismanagement,” and “said the whistleblower claims could support Mr. Musk’s allegations that Twitter committed fraud by misrepresenting the state of its business and key metrics about the users on its platform.”
According to reports, the updated lawsuit was an effort by Twitter’s attorney to drag out the legal process and go on a “grueling fishing expedition” in search of information that would support Musk’s claim that the merger agreement should be terminated. To avoid a genuinely accelerated trial, they are “crushing us down,” Savitt said.