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Elon Musk’s “suboptimal” day in court

Some potential major cracks are beginning to appear in Elon Musk’s suit to undo his $44 billion acquisition of Twitter, yesterday’s hearing in Delaware’s Court of Chancery revealed. Chancellor Kathaleen McCormick, the judge overseeing the case, has yet to rule on one of the biggest questions hanging over it — whether to allow Musk to amend his suit to include whistle-blower accusations from Peiter Zatko, a former Twitter security chief who claimed that the social network had misled the public about its security practices. A ruling on that is expected this week, but there were still plenty of major courtroom revelations yesterday.

Musk told his Morgan Stanley banker to slow the deal down less than two weeks after the purchase agreement was announced. On May 8, Musk texted Michael Grimes, the head of global technology investment banking at Morgan Stanley, to express concerns about the geopolitical environment that could weigh on the deal. “Let’s slow down just a few days. Putin’s speech tomorrow is really important,” said the text, which was read during the hearing and referred to Russia’s invasion of Ukraine. “It won’t make sense to buy Twitter if we’re heading into World War 3.” On May 13, he tweeted that the deal was on hold. (A spokeswoman for Morgan Stanley declined to comment.)

That revelation could put him in breach of contract, which requires the buyer to use his or her best efforts to close a deal. It could also undermine Musk’s complaint that Twitter was not providing information about bots he needed to close the deal. The text makes it seem as if Musk’s private concerns over the transaction had little to do with bots.

Musk discussed re-pricing the deal with Bob Steel, a partner at Perella Weinberg, according to text messages Twitter’s lawyers disclosed yesterday. They detailed an exchange in mid-June in which the two were contemplating using a “contingent value right arrangement” that would have adjusted the payout to Twitter shareholders depending on certain bot figures. (A spokeswoman for Perella Weinberg declined to comment.)

McCormick, at times, showed little patience for Musk’s legal team.

• She told Musk’s team that its efforts to fully identify all of the people with whom he spoke to about the deal “bothered me a lot.” She added, “I ordered you to do the job,” and called his team’s response to her request about naming those parties “suboptimal.”

• Musk’s lawyers argued that even if Musk had done full due diligence for the deal, the Twitter board would have hid the whistle-blowers’ accusations. McCormick replied: “We don’t know what would have happened in diligence because there wasn’t any due diligence, right?”

HERE’S WHAT’S HAPPENING

Juul settles a youth vaping inquiry for $438.5 million. The move will end an investigation by nearly three dozen states over marketing and sales practices that the states contend drove up teen vaping. But the company still faces more lawsuits on the matter.

Bed Bath & Beyond names an interim C.F.O. The embattled retailer appointed Laura Crossen to the role days after Gustavo Arnal, its former finance chief, died by suicide. Shares in Bed Bath & Beyond, which faces a daunting turnaround effort, fell over 18 percent yesterday.

California narrowly avoids rolling blackouts amid a heat dome. Electricity continued flowing despite record energy use as Californians grappled with a sixth day of ferocious temperatures. Still, officials are pleading with residents to turn down air conditioning.

The strong dollar is inflicting pain on rival currencies, and global stocks. With investors flocking to the greenback as the Fed tightens interest rates, other countries’ currencies — including the British pound, the euro and the Japanese yen — are falling to yearslong lows. Few analysts see relief in sight, even as other countries’ central banks raise rates. Stocks in Asia and Europe slumped again today.

A test case for antitrust’s global reach

Illumina last week scored a big win over U.S. antitrust regulators in its battle to buy Grail, a maker of early cancer-detection tests, for $8 billion. But yesterday, the gene-sequencing company faced a major setback when the E.U.’s competition authority blocked the same transaction. The decision makes the deal a test case for a new era of stricter global scrutiny of M.&A.

This is the first application of new E.U. antitrust standards, which were adopted last year. They allow E.U. member states to request a merger review even if the companies involved aren’t concentrated in the eurozone market. The European authorities concluded that the merger would stifle innovation and reduce choice in the emerging market for a new kind of cancer-detection test.

The move is a sharp reversal in Illumina’s fortunes from last week, when an F.T.C. administrative law judge ruled that the deal did not pose a threat to competition. The agency is appealing.

It’s a sign that antitrust is still a global matter, even if the companies argue that their deals aren’t. Illumina has said its deal posed no issues for the bloc: “Grail has no products or customers in Europe,” Francis deSouza, Illumina’s C.E.O., told DealBook. But antitrust experts say that may not matter, if the E.U.’s precedent holds. DeSouza said that could lead “any country” asserting jurisdiction over any business, regardless of whether it operates in a region.

Illumina is preparing for worst-case scenarios, including divesting Grail, which it formally acquired last year despite continuing antitrust reviews by the U.S. and the E.U. Still, the company plans to appeal both this E.U. ruling and the previous one that gave the European Commission jurisdiction in the matter. “We think everyone needs clarity,” deSouza said.

Green tech investing is hotter than ever

Just weeks ago, President Biden signed into law a landmark climate bill to spur investments in the green tech needed to produce clean energy. The bill, the Inflation Reduction Act, is the latest in a series of policy moves that has led to a recent surge in funding for battery factories, solar panel manufacturing and mining.

Investment in renewables will reach $1.2 trillion by 2035, analysts at Wood Mackenzie estimate — in part because the bill, which will invest $369 billion over 10 years in direct funding, loans and loan guarantees, has brought much-needed certainty to companies that political leaders are serious about steering the country away from fossil fuels, report The Times’s Jack Ewing and Ivan Penn.

Corporations like Toyota and Honda have announced that they are investing billions of dollars to build new factories for batteries for electric cars and hybrids. The mining company Piedmont Lithium said it would build a lithium processing plant in Tennessee as the U.S. looks to ease its dependence on Chinese refineries. First Solar, a big solar panel manufacturer, said it would spend $1.2 billion building a factory in the Southeast to meet growing demand.

But even with the bill delivering a large infusion of federal funding, reducing greenhouse gas emissions will be a challenge, analysts and industry representatives say. The new projects will take time to finish; Toyota’s factory, as well as Honda’s venture with LG, won’t start producing batteries until 2025. Procuring the raw materials for batteries is another challenge. So is location. Landowners, environmentalists and businesses have raised concerns about offshore wind farms near fisheries and about building power lines through farmland, which are needed to transmit solar energy.

“Now I understand how to do terminations. In a market where nobody’s hiring, I’ll still have a valuable skill set.”

— Lucille Lam, one of the many recruiters who has had to adapt to an abrupt slowdown in the tech job market.

What the iPhone 14 will say about Apple

At 10 a.m. Pacific today, Apple will unveil the iPhone 14. But Apple watchers say the newest iPhone is not the main event this year. Expectations for anything truly wowie are teensy-weensy. The 14 is likely to have a pro-size screen, even for the basic model. The camera will be slightly better.

But while the iPhone 14 might not be a big reveal, Apple’s C.E.O., Tim Cook, could still make news if he addresses the biggest issues facing the company — privacy, China and how much innovation is still left in the tech giant. Here’s what to listen for.

• On privacy: Unlike its rivals Alphabet (Google) and Meta (Facebook), Apple has long used its commitment to consumer privacy as a selling point. That stance could be under threat as the company seeks more revenue from online advertising, delivering ads on its websites, in Apple Maps or through apps. The Times’s Shira Ovide says it’s hard to do that and not suck up some, or a lot, of consumer data.

• On China: Apple’s strong ties to Beijing are perhaps its biggest risk. Apple knows it. The company is making more of its products outside the country. But quitting China, as The Times’s Tripp Mickle reports, will not be easy. “The iPhone has gone from being a product that is designed in California and made in China to one that is a creation of both countries,” Mickle writes.

• On innovation: Apple has always used lofty goals to elevate its marketing. And this year’s event, with the tagline “far out,” is no different. But Apple these days has been less about getting consumers to buy new devices, and more about getting users to do more things with their iPhones, like making payments or tracking health. If Cook and others talk about all of the cool new things that an iPhone can do — and less about what Apple might do — today’s event may hardly be the “far out” affair investors had hoped for.

THE SPEED READ

Deals

• A prominent anti-E.S.G. activist investor is pushing Chevron to pump more oil over the next decade. (WSJ)

• SoftBank is reportedly near a deal to sell Fortress, the alternative-asset manager, to the sovereign wealth fund Mubadala for over $2 billion. (Bloomberg)

• China’s Tencent raised its stake in Ubisoft, potentially reducing the chances of the French video game publisher being sold. (Bloomberg)

• Microsoft is said to have invested in CloudKitchens, the dark kitchen start-up run by Travis Kalanick. (FT)

Policy

Energy

Best of the rest

• Target’s C.E.O., Brian Cornell, 63, will remain in his role for another three years, adding a bit of stability for the retailer, which has seen its stock fall nearly 30 percent in 2022. (WSJ)

• Inside the “messy” layoffs at the parent company of Snapchat, where some employees couldn’t log into internal systems to get information about being laid off. (Insider)

• “How Abbott Kept Sick Babies From Becoming a Scandal” (NYT)

Thanks for reading! We’ll see you tomorrow.

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