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Twitter accuses Elon Musk of 'sabotage' in first court face-off

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Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

Lawyers for Twitter accused Tesla and SpaceX CEO Elon Musk of attempting to "sabotage" his $44 billion agreement to purchase the social media company on Tuesday in the first hearing of a lawsuit to force the billionaire to close the deal.

The legal teams for Musk and Twitter met in court Tuesday to argue over how soon the case will go to trial. Twitter's attorneys are seeking an expedited process and want a four-day trial to occur in September. Musk's lawyers argue there is no need to rush and want the trial to take place in February 2023.

Twitter lead counsel William Savitt blasted Musk and argued strongly against delay, CNN reports. He said that continuing uncertainty over the deal and this lawsuit "inflicts harm on Twitter everyday, every hour and every day." He also accused Musk of violating his agreement by disparaging Twitter on its own platform.

"Musk has been and remains contractually obligated to use his best efforts to close this deal," Savitt said. "What he's doing is the exact opposite; it's sabotage."

Fewer than three months after Twitter Inc. announced it had accepted Musk's offer to buy Twitter for $54.20 per share, the billionaire businessman attempted to back out of the deal. On July 8, Musk's attorney Mike Ringler alleged in a letter that Twitter had failed to meet its contractual obligation to turn over information that would let Musk assess how many fake or spam accounts are on the platform.

The company has estimated about 5% of the users on its platform are fake or bots, but Musk has claimed the number could be much greater, possibly 20% or more.

Twitter responded with a lawsuit seeking to force Musk to complete the deal. The company alleged that Musk was using bots as a pretext to pull out of a purchase he felt buyer's remorse for. It is asking the court to force Musk to hold up his end of the bargain.

Tuesday's dispute over the timing of the trial reflects the different priorities of the two parties. Twitter reportedly said a speedy trial is needed to complete the deal before a "drop dead" date of October 24, when both sides had previously agreed to complete the transaction, and to "protect Twitter and its stockholders from the continuing market risk and operational harm resulting from Musk's attempt to bully his way out of an airtight merger agreement."

Musk's attorneys have accused Twitter of asking for an "extreme expedition" and asserted that more time is needed for discovery of the bot question. They also refuted Twitter's point about the "drop dead" date, arguing the agreement stipulated that if either party filed litigation over the deal it would no longer apply.

Savitt responded by telling presiding judge Chancellor Kathaleen St. Jude McCormick that there was no need for months of discovery to gather claims on the bot question, which he said is "emphatically and plainly not before the court in this case."

"Nothing in the merger agreement turns on that question, there is no representation or warranty in the merger that is related to how many false accounts there may be on Twitter," Savitt said.

He added that if fake accounts were a concern, "Musk could have conducted diligence about this issue" before agreeing to buy Twitter, but he did not.

McCormick is expected to issue a decision on the timing of the trial at a later date, CNN reports.

Musk has reportedly agreed to pay a $1 billion fine to Twitter if the deal is not completed.

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