Twitter vs Elon Musk: US Court halts trial, urges Tesla CEO to close deal by October 28

According to a court document filed on Thursday, a Delaware judge halted Twitter Inc.'s legal actions against Elon Musk on the eve of trial to give the businessman time to finance his $44 billion acquisition of the social media platform.

Twitter vs Elon Musk: US Court halts trial, urges Tesla CEO to close deal by October 28

The court case was put on hold until October 28 at 5 p.m. EDT so that Musk, the CEO of electric car maker Tesla Inc., could finance the transaction.

Twitter vs Elon Musk: US Court halts trial, urges Tesla CEO to close deal by October 28

Judge Kathaleen McCormick instructed the parties to get in touch with her to set up a November trial if the deal did not conclude by her deadline. Musk's Thursday deposition was postponed by mutual consent because his trial was slated to begin on October 17.

Twitter vs Elon Musk: US Court halts trial, urges Tesla CEO to close deal by October 28

Investors seemed reassured that the order will put an end to many days of uncertainty regarding the deal's status.

Shares of Twitter increased 2.7 per cent in after-hours trading after losing 3.7 per cent on the day's close.

The richest man in the world said this week that he would buy Twitter at the $54.20 per share price that was agreed upon in April, subject to receiving loan funding.

That was a turning point for Musk, who had been fighting Twitter in court for months in an effort to get out of the agreement. He asserted, among other things, that Twitter had misled him over the number of actual users of its site.

In a court document submitted on Thursday, Musk said that while banks were cooperating to finance the acquisition, he still needed more time. Musk claimed that a little delay was still better than the months it would take to go through a trial and appeal.

In an indication of the lack of confidence between the parties, Twitter stated in a court filing that the judge should reject the idea and that Musk's plan was "an invitation to further mischief and delay."

According to Twitter, Musk should have to shut down the next week. A corporate representative for a lending bank allegedly testified in court on Thursday that Musk has yet to send them a borrowing notice and has not made clear his intention to close.

As the rapid pace of interest rate hikes has ratcheted up market volatility and decreased the desire for leveraged financing, major banks that pledged to fund $12.5 billion, or approximately 28 per cent of the deal, might be facing large losses.

According to Randy Frederick, managing director of trading and derivatives at the Schwab Center, "There's still some uncertainty based on whether or not Elon can find the actual financing to do the deal."

There is conjecture over whether Musk will sell additional shares of the electric vehicle manufacturer's stock to finance the transaction after he raised $15.4 billion by selling Tesla shares this year and is relying on major investors for a portion of the funding.

"Financing will eventually end up going through one way or another. It is just a point of negotiating terms at this stage," Robert Gilliland, managing director at Concenture Wealth Management, stated.

(With inputs fom Reuters)

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