Judge grants Elon Musk’s request to delay his trial with Twitter

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By georgeskef

Delaware judge gave Musk until October 28th to close the deal. Although the trial was scheduled to begin in less than a week it could still take place in November.

The surprise return of Elon Musk to the bargaining table at Twitter this week might have been just the beginning of the long-running struggle for the company’s future.

Twitter sued Musk on Thursday. Mr. Musk was able to stop it from proceeding. He requested a judge to delay the trial, which was due to start in less than a week. This could allow him to fulfill a deal he made in April to buy the company for $44billion.

Kathaleen McCormick was the judge in the case and granted Mr. Musk his request. This gave him three weeks to finish the purchase of Twitter.

The delay in the trial is the latest in a series of events that has become the most closely watched and turbulent corporate fight in recent years. It pits Mr. Musk’s outsized personality and wealth against Twitter, which despite its high profile, has struggled to manage management turmoil and profitability.

This decision allows Mr. Musk to have more time to settle his financing. It may have been more difficult than his original offer due to inflation and slowing economic growth. In a legal filing, Mr. Musk stated that the process would take several months and that he could have it completed by October 28th. The judge stated that if the transaction is not completed by Oct. 28, a trial will take place in November.

Twitter opposed the motion. They argued that Musk didn’t appear serious about financing his trial and that the trial should continue unless Musk accepts his latest offer of $54.20 per Share.

A Twitter spokesperson said that they were looking forward to closing the transaction at $54.20 on Oct. 28.

As members of the Twitter board discussed Musk’s offer, Mr. Musk requested a delay. Negotiations dragged on into their third day.

Twitter accused lawyers for Mr. Musk of slowing down the process by insisting on the lawsuit be continued, while Twitter claimed that any attempt to stop the litigation was an invitation to more mischief and delay.

Lawyers for Musk stated in a legal filing that “Twitter won’t take no for an answer.” “Astonishingly they insist on proceeding with litigation, recklessly putting the deal at risk, and gambling with the stockholders’ interests. It is a huge waste of resources and time for both parties. Additionally, it will hinder the ability of the parties to close the transaction.

Twitter was set to meet Mr. Musk in court on Oct. 17. On Monday, he sent a surprise letter to Twitter stating that he would pay $44Billion for the company. This was what he had agreed to in April, before changing his mind and deciding to end the deal.

Twitter’s board was left with two high-stakes negotiations after Mr. Musk’s new proposal. One over the legal battle, the other about a possible agreement that would avoid the courtroom drama.

Two people familiar with the discussions say that Twitter intends to continue with litigation until a deal can be reached. To manage the deal-making process, the board’s transaction committee (which includes technology executives Bret and Martha Taylor) has met weekly with financial and legal advisers.

Normally, closing such a deal is a simple event with both sides exchanging legal documents. Twitter has been reluctant to give up on its lawsuit due to Mr. Musk’s volatile business deals, according to people.

In a legal filing, lawyers for Twitter claimed that Musk refused to agree to a closing date. His lawyers countered that Musk was unwilling to sign a closing date and that the banks who had agreed to finance his bid for Twitter were ready to honor those commitments.

Mr. Musk suggested on Thursday that he was reluctantly coaxed to the negotiation tables. tweeted a scene from “The Godfather”, Part III, which included the line “Just when it seemed I was out, they pull I back in.”

Recent weeks have seen a title Mr. Musk suggested buying Twitter at a 30% discount. People familiar with the conversations stated that discussions eventually narrowed down to about 10 percent.

Alex Spiro representing Mr. Musk, a lawyer, stated that Twitter seemed willing to negotiate the price.

“Twitter offered Mr. Musk billions on the transaction price.” Mr. Musk declined because Twitter tried to place certain self-serving terms on the deal,” Mr. Spiro stated, without providing more details. A Twitter spokesperson declined to comment on the claim.

After these conversations had ended, Musk told the company Monday that he was willing to continue with the April price.

Negotiations have remained focused on debt financing. If Mr. Musk’s financing fails, he will be able to pay $1 billion to Twitter for a breakup fee and then walk away from the deal.

Morgan Stanley, Bank of America, and Barclays are among the lenders that have committed to lending $12.5 billion. These banks will be responsible for the debt until next year. These banks must provide fully prepared letters of commitment to the debt in order to complete the deal.

To reduce risk in the event that borrowers are unable to repay their loans, investment banks often sell the debt they have arranged for them. This can take several months and is costly. The banks may find it difficult to do so right away, as economic uncertainty has hurt investors’ interests and forced banks to sell such loans at loss.

On Thursday, a corporate representative from one of the banks stated that Mr. Musk hadn’t communicated with the bank about his plans to close the transaction. Twitter claimed in a legal filing that the officer testified that Mr. Musk didn’t. The bank official was not identified in the filing. It also did not indicate the location of the official who testified. Twitter accused Mr. Musk of failing to make reasonable efforts in securing the debt financing. This would be a breach of their contract.

Mr. Musk’s personal wealth as well as equity investors will provide the remaining funds for the $44billion deal. To raise the money needed to purchase Twitter, Mr. Musk, Tesla’s chief executive, has already sold $15.5 billion of stock in the electric carmaker company.

He stated that he had raised $7.1 million from equity investors including Sequoia Capital and Andreessen Horowitz, the most prestigious venture capital firms, and some of his closest confidants, such as Larry Ellison, the tech mogul.

It is not clear if the terms of the agreement allow them to withdraw due to the new circumstances. Representatives from Andreessen Horowitz, and Oracle (the company Mr. Ellison runs), did not respond to inquiries for comment.

Binance spokeswoman, a cryptocurrency exchange, stated that nothing has changed regarding the company’s plans for the deal.

Deal-making continues in the shadow of Twitter’s lawsuit. If a deal isn’t reached, it could continue in November. The Delaware Court of Chancery, which is specialized in handling deal disputes, may host testimony from Mr. Musk or other top Twitter executives if a trial takes place.

Two people familiar with the matter stated that a scheduled deposition with Mr. Musk on Thursday was canceled due to negotiations continuing. According to a source familiar with the matter, it has been rescheduled for Monday. However, Mr. Musk’s sit-down on the record has been rescheduled twice and could be moved again due to the trial postponement.

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