Judge Gives Elon Musk a Twitter Ultimatum and Just Three Weeks to Decide
In order to avoid a trial, Delaware Chancery Court ruled on Thursday that Elon Musk has to close his deal for Twitter by Oct. 28.
Chancellor Kathaleen McCormick said in the ruling that if Musk’s deal to acquire the social media platform is not closed by that date, then the parties must schedule a November trial with her, the Wall Street Journal reported.
The original trial date was set for Oct. 17 after McCormick denied Musk’s requests to delay the trial and instead granted Twitter’s request to set the trial sooner.
Musk had been trying to get out of the Twitter deal for the past few months, but with the Oct. 17 date drawing closer, the Tesla CEO restarted negotiations earlier in the week and proposed to close the deal as originally agreed.
Musk offered to buy Twitter at $54.20 a share if Twitter would end litigation and close the deal, CNBC News reported.
The Tesla CEO originally wanted out of the deal because he said that Twitter had not given him accurate numbers and data about the number of real users and bots on the platform, Reuters reported.
Twitter then sued Musk in July in an attempt to get him to stick to his purchasing agreement, CNBC reported.
Finally, as the matter came before the Delaware Chancery Court, Musk changed his plan after months of litigation and signaled that he was open to acquiring Twitter once again.
However, Twitter did not agree at first to Musk’s negotiations to buy the platform and end litigation.
“Twitter will not take yes for an answer. Astonishingly, they have insisted on proceeding with this litigation, recklessly putting the deal at risk and gambling with their stockholders’ interests,” a filing from Musk’s side read, according to CNBC.
So in response, Musk asked for a delay from the Oct. 17 scheduled trial, so financing could be put together to finish the deal.
But though Musk said that he planned to pull the financing together for the deal to go through once and for all, Twitter was still suspicious and not happy about the delay to Oct. 28.
In a filing, Twitter’s legal team said that they believed Musk and his lawyers were playing for a delay, not to actually close the deal, but to go in some other direction.
Twitter’s legal team said that Musk’s “proposal is an invitation to further mischief and delay,” CNBC reported.
″‘Trust us,’ they say, ‘we mean it this time,’ and so they ask to be relieved from a reckoning on the merits. To justify that relief, they propose an order that allows them an indefinite time to close on the basis of a conditional withdrawal of their unlawful notices of termination coupled with an explicit reservation of all ‘claims and defenses in the event a closing does not occur,'” the Twitter filing read.
But with McCormick’s ruling, the fight over the deal and litigation ended for the moment, and Twitter announced that it was looking forward to finally closing the deal.
“We look forward to closing the transaction at $54.20 by Oct. 28th,” Twitter said in a statement, Reuters reported.
Now Musk will have to pull together the financing to finish the deal, which poses a greater risk for the banks now than it was in April when Musk first agreed to buy Twitter since the markets have been falling, CNBC reported.
But though this is a risky move for the banks to finance Musk now, his lawyers said, “By far the most likely possibility is that the debt is funded in which case the deal will close on or around Oct. 28,” CNBC reported.
“[C]ounsel for the debt financing parties has advised that each of their clients is prepared to honor its obligations under the Bank Debt Commitment Letter on the terms and subject to satisfaction of the conditions set forth therein,” Musk’s legal team added.
However, many are watching closely to see how the financing for this deal will play out since so much is at stake.
“There’s still some uncertainty based on whether or not Elon can find the actual financing to do the deal,” said Randy Frederick, the Schwab Center’s managing director of trading and derivatives, according to Reuters.
Others are sure that Musk will get the financing one way or the other.
“Financing will eventually end up going through one way or another,” Concenture Wealth Management’s managing director Robert Gilliland said. “It is just a point of negotiating terms at this stage.”
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