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Last month, Peiter Zatek’s allegations became public, giving billionaire Elon Musk a possible strategy he could use in court to escape a deal to take over Twitter.
Elon Musk can use a whistleblower’s claims in his legal case against Twitter Inc., but the billionaire can’t delay the trial over his attempt to back out of his $44 billion deal for the company, a judge ruled Wednesday.
“I am convinced that even a four-week delay would cause further damage to Twitter,” wrote Delaware Court of Chancery Chancellor Kathaleen McCormick as she confirmed the trial would begin next month.
Shares of Twitter rose about 4% to $40.15 in early trading Wednesday.
“We hope that winning the motion to amend will move us one step closer to the truth coming out in the courtroom,” Alex Spiro, Musk’s attorney, said in a statement.
Musk’s legal team argued Tuesday that justice demanded a five-day delay in the trial so Musk could investigate claims by whistleblower Peiter Zatak, known as “Mudge,” that Twitter is hiding weaknesses in its security and privacy practices.
Musk’s initial case against Twitter alleged that the company misrepresented the occurrence of spam or bot accounts on the platform.
Last month, Zatka’s allegations became public, giving Musk, the world’s richest man, fresh ammunition to support what legal experts said was a long-running attempt to walk away without paying a $1 billion termination fee.
“We look forward to making our case in court beginning on October 17 and intend to close the transaction at the price and terms agreed upon with Mr. Musk,” a Twitter spokesperson said.
In July, Twitter sued Musk, who is also the chief executive of electric vehicle maker Tesla Inc., to hold him to an April agreement to buy the company for $54.20 a share. The company argued that Musk was cool with the takeover as global politics and inflation roiled markets soon after the deal was signed.
Late Wednesday, McCormick ordered Musk and Jared Birchall, who help manage Musk’s wealth, to obtain and hand over phone records so Twitter could confirm that Musk did not write about the deal during key periods, as Musk claimed.
McCormick said there were “obvious flaws” in the text messages Musk provided to Twitter in the lawsuit.
At Tuesday’s hearing, a lawyer for Twitter read a memo from Musk that came to light during the lawsuit, which the lawyer said showed the billionaire wasn’t really interested in the spam accounts.
In May, when Russian President Vladimir Putin warned the West about his country’s war in Ukraine, Musk sent a note to banker Morgan Stanley that read: “It won’t make sense to buy Twitter if we’re heading for World War III. ”
The trade deal allows Musk to leave under certain narrow conditions, though war is expressly ruled out.
