Twitter Litigation is put on hold in order for Elon Musk to Complete the Transaction by October 28
A Delaware judge ordered the lawsuit suspended on the eve of trial, giving Musk time to fund his $44 billion settlement.
Wilmington: A Delaware judge on Thursday ordered a halt to Twitter Inc’s lawsuit against Elon Musk on the eve of trial, giving the billionaire time to finance his $44 billion acquisition of the social media platform.
The ruling came after days of uncertainty about Musk’s intentions and removed the threat that the misguided businessman would have had to testify under oath this week about his allegations that Twitter fraudulently misled him.
The judge’s order said that if Musk, the world’s richest person, failed to close by October 28 at 5 p.m. Deadline EST, will set a trial date in November.
“We expect to close the transaction at $54.20 by October 28,” Twitter said in a statement. In an earlier lawsuit, the company urged the judge to reject the proposal, calling Musk’s plan an “invitation for more damages and delay.”
Musk, the chief executive of electric carmaker Tesla, was due to stand trial on October 17 and his testimony on Thursday was postponed by mutual consent.
Shares of Twitter, which ended the day down 3.7% at $49.39, were up 1% after hours as investors seemed calm after days of turmoil. This week, Musk said he would buy Twitter at the $54.20 a share he agreed to in April, on the condition that the deal guarantees debt financing.
This was a reflection of Musk, who spent months litigating with Twitter while trying to get out of the deal. He claimed that Twitter misrepresented the number of real users on its platform, among other accusations.
Musk said in court Thursday that the banks that sued were working cooperatively to finance the deal, but that he needed more time. A short delay, he said, is better than the months it takes for a trial and an appeal.
Twitter said Musk should close its doors next week and said a corporate representative from a lending bank testified Thursday that Musk had not sent them a loan notice and told them he intended to close.
The major banks that committed to financing $12.5 billion, or about 28% of the deal, could face huge losses as the rapid pace of rising interest rates intensified market volatility and dampened their appetite for leveraged funding.
“There is still some uncertainty as to whether or not Elon can find actual funding for the deal,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center.
Musk raised $15.4 billion from the sale of Tesla shares this year and is counting on big investors for much of the financing, which has led to speculation that he will sell more shares of the electric car maker to fund the deal.
“The funding will eventually dry up one way or another. It’s just a negotiating point on terms at this point,” said Robert Gilliland, managing director of Accenture Wealth Management.
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