A judge has delayed a looming trial between Twitter and Elon Musk, giving the Tesla CEO more time to close his $44 billion deal to buy the company after months spent fighting to get out of it.
Musk had asked to halt the upcoming Delaware court trial, where the Tesla billionaire was expected to fare poorly against Twitter's lawsuit to force him to complete his April merger agreement. Musk revived the takeover offer on Monday but said he needed time to get the financing in order.
Chancellor Kathaleen St. Jude McCormick, head of the Delaware Chancery Court, said Thursday that Musk and Twitter now have until Oct. 28 to close the deal. A trial originally set for Oct. 17 will happen in November if they don’t, she said.
Twitter had asked McCormick earlier Thursday to proceed with the trial, saying the billionaire refuses to accept the “contractual obligations” of his April agreement to buy the social media company and take it private.
Twitter disputed Musk’s claim that the San Francisco-based company is refusing to accept his renewed bid. Musk told Twitter earlier this week he’s ready to buy the company once again after trying to back out of the deal over the summer, accusing it of refusing to give him information about “spam bot” accounts on the service.
Twitter described Musk’s move to delay the trial as “an invitation to further mischief and delay” after his arguments for terminating the agreement haven't had merit.
But after the judge's ruling, Twitter reiterated in a statement that it was ready to close the deal on the share price agreed upon in April: “We look forward to closing the transaction at $54.20 by October 28th,” referring to the price Musk originally offered for each Twitter share.
Brooklyn Law School professor Andrew Jennings said Twitter wants to be certain that the deal will get done and not allow “wiggle room for Musk to walk away again.”
Musk attorneys argued that Twitter was disagreeing with the trial delay “based on the theoretical possibility” of Musk not coming up with the financing, which they called “baseless speculation.”
They said Musk’s financial backers “have indicated that they are prepared to honor their commitments” and are working to close the deal by Oct. 28.
Musk attorney Alex Spiro said in a statement Thursday that “Twitter offered Mr. Musk billions off the transaction price” but Musk “refused because Twitter attempted to put certain self-serving conditions on the deal.” He didn’t elaborate on what those conditions were. Twitter hasn’t described the talks beyond what its attorneys have said in court.
Twitter’s shares fell $1.91, or 3.7%, to close at $49.39 on Thursday. It was the stock's second day of declines following a surge of more than 22% on Tuesday after Musk made his renewed offer to buy the company.
'Twitter Will Not Take Yes for an Answer'
The Tesla chief claims the embattled social media company balked at the his demand to freeze the litigation.
Musk's request to delay the trial came two days after he revived his takeover plan. The unpredictable billionaire's July withdrawal from the $44-billion transaction prompted Twitter to sue Musk over breach of contract in a Delaware court. A trial is scheduled to start on October 17.
Financing Now in Question
Apollo Global Management Inc. and Sixth Street Partners, which had been looking to provide financing for Elon Musk's proposed $44 billion buyout of Twitter Inc., are no longer in talks with the billionaire entrepreneur, said two sources familiar with the matter Wednesday.
Apollo, Sixth Street and other investors had committed more than $1 billion to bankroll the deal. Investment banks have pledged $12.5 billion, and Musk is expected to sell Tesla shares to finance the balance.
The news comes as Musk and Twitter agreed to postpone the billionaire's deposition scheduled for Thursday. The two sides are trying to reach an agreement to end their litigation and close the deal, a source familiar with the litigation said Wednesday.
In a reply to tweets saying that neither of the private equity firms were part of the $7.1 billion of third-party equity financing announced in early May, nor part of the debt financing, Musk said: "correct."
Mistrust Between Musk, Twitter Grows
Since Musk made his offer on Monday, talks have dragged on longer than some initially expected, according to sources close to the litigation.
Wedbush analyst Dan Ives said it "would be an understatement" to say talks between both sides are going poorly. "There is a lot of mistrust for obvious reasons," he said.
Major banks that committed to fund $12.5 billion, or about 28% of the deal, could be facing hefty losses as the swift pace of interest rate hikes has ratcheted up market volatility and dampened appetite for leveraged financing.
"There's still some uncertainty based on whether or not Elon can find the actual financing to do the deal," said Randy Frederick, managing director of trading and derivatives for the Schwab Center.
Musk has raised $15.4 billion by selling Tesla shares this year and is leaning on large investors for a chunk of the financing, leading to speculation over whether he will sell more of the electric-vehicle maker's stock to fund the deal.
"Financing will eventually end up going through one way or another. It is just a point of negotiating terms at this stage," said Robert Gilliland, managing director at Concenture Wealth Management.
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