In a 16-page response the lawsuit against Musk for ending his $44 billion acquisition of Twitter, the billionaire's legal team says that the case should go to trial by February next year.
The bot account dispute, which is fundamental to Twitter’s value, is fact and expert intensive and requires "substantial time" for investigation and discovery, Musk's lawyers argue.
"Twitter’s sudden request for warp speed after two months of foot-dragging and obfuscation is its latest tactic to shroud the truth about spam accounts long enough to railroad Defendants into closing," the filing said.
A 'Seller Friendly' Deal
Musk, who indicated he was acquiring Twitter to ensure free speech and rid the platform of bots and fake accounts, decided to back out of the deal on 10 July, accusing the company of lying about how many bots were on its platform.
Twitter, determined to enforce the $44 billion deal, approached the Delaware chancery court to file a case.
Musk's proposed merger agreement, which he referred to as “seller-friendly”, didn't leave him with many options to back out of the deal, Twitter's lawsuit suggests.
"Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away," Twitter's lawsuit says.
The lawsuit also argues that Musk was well aware about the bot issue and got buyer's remorse after the share price of Tesla, Twitter and tech stocks in general, tanked. It paints Musk as a buyer who used "bad faith" strategies to back out of the deal.
"After the merger agreement was signed, the market fell. As the Wall Street Journal reported recently, the value of Musk’s stake in Tesla, the anchor of his personal wealth, has declined by more than $100 billion from its November 2021 peak. So Musk wants out," it says.
Case Hinges on Bots
Several experts believe that Twitter has the upper hand in this case.
Musk's agreement with Twitter contains language that allows him to walk away only if Twitter’s securities filings are inaccurate enough to have a 'material adverse effect' (MAE) on the company.
"That is an incredibly high standard: Delaware courts have almost never found an MAE. There is a rule of thumb that an MAE requires a 40 percent decrease in long-term profitability," legal columnist Matt Levine wrote in a column for Bloomberg.
"If it goes to court, Musk has the burden to prove more likely than not, that the spam account numbers not only were false, but they were so false that it will have significant effect on Twitter's earnings going forward," Ann Lipton, a professor at Tulane Law School, told Reuters.
Experts think the case could end in re-negotiation or settlement, as most such cases do in Delaware courts.
(With inputs from Bloomberg and Reuters)