A Delaware judge 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 takeover of the social media platform.
The ruling removed the threat that the erratic entrepreneur would have to testify about his claims that Twitter fraudulently misled him after days of uncertainty about Musk's intentions.
The judge said if Musk, the world's richest person, didn't close by her Oct. p.m. EDT deadline, she would schedule a trial for November.
The transaction is expected to be completed by October 28th, and we look forward to closing it at $54.20, according to Twitter. In an earlier court filing, the company urged the judge to reject the proposal, calling Musk's plan an invitation to more mischief and delay. Musk, chief executive of Tesla Inc., was due to go to trial on October 17 and his Thursday deposition was postponed by mutual agreement.
After hours of confusion, Twitter shares rose 1%, down 3.7%, to $49.39, as investors appeared to be reassured after days of confusion. Musk said this week that he would purchase Twitter at the $54.20 per share price he agreed in April, on the condition that the deal could secure debt financing. That was a reversal for Musk, who spent months in litigation with Twitter as he tried to get out of the deal. He claimed that Twitter misrepresented the number of real users on its platform.
Musk said banks are working cooperatively to fund the deal, but he needed more time. He argued that a brief delay was preferable to the months it would take to get a trial and appeal.
A corporate representative for a lending bank testified on Thursday that Musk has yet to send a borrowing notice and has not said that he intends to close, and that was a statement from Twitter that Musk should have to close next week.
Major banks that commit to funding $12.5 billion, or about 28% of the deal, could be facing hefty losses because of the rapid pace of interest rate hikes and dampened appetite for leveraged financing.
Randy Frederick, Schwab Center managing director of trading and derivatives, said there is still some uncertainty based on whether or not Elon can get the actual financing to do the deal.
Musk 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 about whether he will sell more of the electric-vehicle maker's stock to fund the deal.
Financing will end up going through one way or another. Robert Gilliland, the managing director at Concenture Wealth Management, said it was just a point of negotiating terms at this stage.