Summer vacation is now officially over for Elon Musk. On Monday, images emerged of the shirtless and pale Tesla chief executive partying on a yacht in Greece with the Hollywood super agent Ari Emanuel. But just 24 hours later, a Delaware judge put a crimp in his holiday, ordering Musk on Tuesday to stand trial in October as Twitter seeks to force him to complete the $44bn buyout of the company he has tried to walk away from.
Musk had argued there was no need to begin the proceedings until next February. Having sought to abandon the deal over concerns the social network was awash in bots and fake accounts — far greater than the 5 per cent total it had long estimated — he argued that presenting such a case in court would require dozens of experts needing months to complete their analysis. (Presumably Musk’s contribution to this onerous inquiry was not needed this week or could be handled from the sea.)
For their part, Twitter’s lawyers had focused on the risk of “irreparable harm” to the social network if the case was not heard until 2023. Such a lengthy wait before a trial would damage the company, they argued, in part because of what they described as Musk’s ongoing campaign of “sabotage”, including the billionaire’s habit of provocative tweets directed at the company.
The Delaware judge Kathaleen McCormick agreed with Twitter that time was of the essence, noting the company was having to operate in the shackles of the merger agreement and the costs of delay were more acute when the fate of a public company like Twitter hung in the balance.
Musk himself may not personally be too bogged down in the breakneck preparation for the preparation, apart from a deposition he will probably have to sit for (he already has a colourful history when being questioned in Delaware cases). But he would be well-served to think about his own risks of irreparable harm. Twitter is seeking to close the buyout and force Musk’s lending banks to come up with $13bn of debt financing they have committed to, along with the $33bn Musk himself is on the hook for.
Most legal experts believe Twitter has a straightforward case and Musk’s obsession with the bot issue is both legally irrelevant and a red herring. Twitter says that Musk has offered no proof that the number of fake accounts on the platform exceeds the company’s estimates and far more importantly, its statements in securities filings have always been loose enough on the topic that it has never made any misstatement about bots at any rate.
Musk faces the real possibility that within five months he is going to be hit with a legal order to close the transaction. There is a chance he responds with his characteristic impunity and tries to evade it; legal experts are divided on the enforcement mechanism for a so-called “specific performance” decree should Musk initially baulk at compliance.
Tesla, despite a sharp sell-off in 2022, remains a valuable, listed company dependent on the goodwill of capital markets and its public shareholders. Musk’s SpaceX, perhaps worth more than $100bn, will similarly not want to be stigmatised by his current rebellion. It may even be time to start back-channeling with Twitter on a settlement.
Writing a cheque for perhaps $10bn before Labour Day may be worth avoiding the nightmare of being told to cough up $33bn. The richest man in the world is learning of a reality the rest of us cannot avoid: winter invariably arrives more quickly than expected.